As filed with the Securities and Exchange Commission on April 15, 1999
Securities Act of 1933 File No. 2-80886
Investment Company Act of 1940 File No. 811-3626
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 44
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 39
CITIZENS FUNDS*+
(Exact name of Registrant as specified in charter)
230 Commerce Way, Suite 300, Portsmouth, NH 03801
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (603) 436-5152
Sophia Collier
230 Commerce Way, Suite 300
Portsmouth, NH 03801
(Name and Address of Agent for Service)
It is proposed that this filing become effective:
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On _____ pursuant to paragraph (b)
[X] 75 days after filing pursuant to paragraph (a)
[ ] On (date) pursuant to paragraph (a)of Rule 485
- --------------------------------------------------------------------------
*Formerly known as Citizens Investment Trust
+This filing relates only to shares of Citizens Small Cap Index Fund.
<PAGE>
PROSPECTUS
CITIZENS FUNDS
Citizens Small Cap Index Fund
__________ __, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
<PAGE>
Contents
THE FUND
Investment Objective of the Fund................................. __
Principal Investment Strategies.................................. __
Principal Risks.................................................. __
Performance...................................................... __
Fees and Expenses................................................ __
ADDITIONAL FUND DETAILS
Socially Responsible Investing................................... __
Citizens Small Cap Index Fund.................................... __
Additional Investment Strategies and Risks....................... __
ORGANIZATION AND MANAGEMENT OF CITIZENS FUNDS
Our Trustees..................................................... __
The Role of Investment Adviser................................... __
Our Sub-Advisers................................................. __
Citizens Funds' Management Fees.................................. __
12b-1 Fees....................................................... __
SHAREHOLDER INFORMATION
How We Value Our Shares.......................................... __
How to Buy and Sell Shares....................................... __
Shareholder Services and Policies................................ __
Mailing Address and Wiring Instructions.......................... __
DIVIDENDS, DISTRIBUTIONS AND TAXES.................................. __
THE YEAR 2000....................................................... __
<PAGE>
THE FUND
Our goal at Citizens Funds is to achieve strong financial results while
investing in companies that are managed in a socially responsible manner.
INVESTMENT OBJECTIVE OF THE FUND
The fund's investment objective is capital appreciation.
The investment objective of the fund cannot be changed without the approval of
a majority of the outstanding shares of the fund.
PRINCIPAL INVESTMENT STRATEGIES
The Citizens Small Cap Index Fund follows a passive approach to investing. The
fund purchases and holds the common stock of approximately 300 small-sized
companies that make up the Citizens Small Cap Index(. The fund invests in these
companies in proportion to their market capitalizations, which means that
relatively larger companies have greater representation in the fund than the
smallest ones. At least 65% of the fund's assets will be invested in companies
whose market capitalizations, at the time the fund invests in them, are in the
$25 million to $4 billion range.
PRINCIPAL RISKS
As with all mutual funds, you could lose money by investing in the fund. The
fund is designed for long-term investors who can accept the greater risks
associated with common stock investments. Other principal risks of investing in
the fund are summarized below.
The share price of the stocks in which the Citizens Small Cap Index Fund
invests may go up and down based on market conditions and the success or
failure of the companies that issued the stocks. Equity securities have
historically gone up and down more than fixed income securities. Because it is
passively managed, the fund generally will not sell stocks of companies even
though they are experiencing financial trouble or their share prices go down.
Small companies carry additional risks because their shares are more volatile
and thinly traded. Compared to larger companies, small-sized companies are more
subject to market movements because of limited product lines, markets,
distribution channels or financial and management resources. There also may be
less publicly available information about small companies.
<PAGE>
PERFORMANCE
Citizens Small Cap Index Fund commenced operations on June 30, 1999 and
therefore does not have annual returns for a full calendar year.
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the fund. Annual fund operating expenses are paid out of the
assets of the fund. The fund does not have a sales charge (load).
<TABLE>
<CAPTION>
Citizens Small Cap Citizens Small Cap
Index Fund - Index Fund -
Standard shares Institutional Class shares
<S> <C> <C>
Shareholder Fees
(fees paid directly
from your investment)* None None
Annual Fund
Operating Expenses
(expenses that are
deducted from fund assets)
Management Fees .50% .50%
Distribution
(12b-1) Fees .25% None
Other Expenses 2.54% 2.14%
Total Annual Fund
Operating Expenses 3.29% 2.64%
Fee Waiver and Expense
Reimbursement+ 1.74% 1.74%
Net Expenses 1.55% .90%
</TABLE>
_______________________________
* See "Costs for Services," below.
+ The investment adviser to the fund has contractually agreed to waive
certain fees and reimburse certain expenses in the fiscal year ending
June 30, 2000.
<PAGE>
EXAMPLE: This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds. The Example assumes
that:
o you invest $10,000 in the fund for the time periods indicated;
o you redeem all of your shares at the end of each period;
o your investment has a 5% return each year (the assumption of a
5% return is required by the Securities and Exchange Commission
and is not a prediction of the fund's performance); and
o the fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 Year 3 Years
Citizens Small Cap Index Fund
Standard shares* $___ $___
Institutional Class shares** $___ $___
____________________________________
* Expenses reflect a contractual reimbursement by the fund's adviser
without which the expenses would have been $___ for 1 Year, and $___ for
3 Years.
** Expenses reflect a contractual reimbursement by the fund's adviser
without which the expenses would have been $___ for 1 Year, and $___ for
3 Years.
COSTS FOR SERVICES
Below $2,500/ $1,000 minimum balance fee $3.00/mo.
Annual IRA fee (per account) $10.00
Maximum Annual IRA fee (for all accounts) $20.00
Returned checks $15.00
Returned Electronic Purchase/Payment - ACH $15.00
Outgoing wire transfer $10.00
International wire transfer $20.00
Stop payments $10.00
ATM withdrawal/cash advance $0.65 each/$2.50
Copies of statements, checks and tax forms $2.00/each
(free if ordered through our
audio response system)
<PAGE>
ADDITIONAL FUND DETAILS
More information about the fund's investment strategies and risks appears below
and in the fund's Statement of Additional Information. Of course the fund may
not, and is not required to, invest in all of the investments or engage in all
of the investment techniques listed in this prospectus or in the Statement of
Additional information.
SOCIALLY RESPONSIBLE INVESTING
Our goal at Citizens Funds is to achieve strong financial results while
investing in companies that are managed in a socially responsible manner.
To find these investments, we SEEK companies that:
o make good and useful products; and
o have positive environmental, community and workplace records.
We AVOID companies:
o that engage in workplace discrimination or other unfair labor
practices;
o whose primary business is producing alcohol, tobacco, firearms or
nuclear power; or
o that use animals to test personal-care products or otherwise treat
animals in an inhumane manner.
CITIZENS SMALL CAP INDEX FUND
The Citizens Small Cap Index Fund seeks to match the performance of the
Citizens Small Cap Index(TM). To pursue this goal, the fund generally invests
in the companies that make up the Index, which is a market-weighted index of
approximately 300 companies, most of which are small-sized companies that also
are included in the S&P SmallCap 600 Index. The others are companies selected
in order to provide appropriate industry and sector diversity, which we believe
is essential to a sound indexing strategy. All of these companies have passed
our rigorous social and environmental screens, and we believe these companies
best represent their industries.
MANAGEMENT
The portfolio manager for the Citizens Small Cap Index Fund follows a passive
management approach. What this means is that the fund does not actively
purchase and sell stocks. Instead, the fund purchases and holds the common
stock of all the companies that make up the Citizens Small Cap Index in
proportion to their weighting in the Index. We do not expect the fund's
portfolio turnover rate to exceed 20% annually.
<PAGE>
DEFENSIVE POSITIONS
In an attempt to protect itself from adverse market, economic, political or
other conditions, the fund may also on occasion take temporary defensive
positions in cash, money market instruments or other fixed income securities.
These positions may prevent the fund from achieving its investment objective or
otherwise adversely affect fund performance.
RISKS
o Market Risk. The stock market is sometimes volatile and may change
dramatically and unpredictably in response to political, regulatory,
market or economic developments. The value of your investment in the
Citizens Small Cap Index Fund will go up and down based on market
conditions.
o Company Risk. The value of an individual stock varies with the
prospects of its issuer and can be more or less volatile than the
market as a whole. The success or failure of companies in which the
fund invests will cause the value of your investment to go up and
down.
o Passive Investing Risk. Because it is passively managed, the Citizens
Small Cap Index Fund generally will not sell stocks of companies even
though they may be experiencing financial trouble or their share
prices are declining.
o Small Size Company Risk. Small-sized companies have unique risks and
may have speculative characteristics. They may be dependent on
individual managers who may have less experience than managers of
larger companies, have a difficult time obtaining financing or market
share, and have limited product lines and distribution channels.
Their shares also are more volatile and thinly traded than the shares
of larger companies. As a result, they often are harder to sell at a
fair price and have greater price fluctuations and greater exposure
to market fluctuations than stocks of larger companies. An investment
in this fund therefore involves substantial risk.
ADDITIONAL INVESTMENT STRATEGIES AND RISKS
In addition to the principal investment strategies and risks discussed above,
the fund may on occasion invest in certain other types of securities that
involve particular risks, including the following:
DERIVATIVES
Derivative securities such as futures, options and warrants are financial
instruments whose value depends on and derives from underlying investments,
indexes or currencies. Derivatives involve special risks and may result in
losses. For further information about the risks of derivatives see the
statement of additional information (SAI).
<PAGE>
OTHER INVESTMENTS
In addition to the principal investment strategies described above, the fund
may on occasion invest in foreign securities, preferred stocks, convertible
securities, when-issued securities, illiquid securities, and restricted
securities and therefore may be subject to other risks as described in the
fund's SAI.
MANAGEMENT OF CITIZENS FUNDS
Citizens Funds is a Massachusetts business trust and an open-end investment
company registered under the Investment Company Act of 1940 as a diversified
management company. Citizens Funds is also a "series" company, which means we
can have several funds, each with its own investment objective, assets and
liabilities. A board of trustees governs the operations of Citizens Funds.
Our Trustees
Azie Taylor Morton, chair of the board of trustees, operates an investment
management firm and was the 36th Treasurer of the United States.
*Sophia Collier is Citizens Funds' former president and is the principal owner
and chair of the board of directors of our investment adviser, Citizens
Advisers.
*John Shields is Citizens Funds' current president and president and chief
executive officer of Citizens Advisers.
Lokelani Devone is assistant general counsel at DFS Group Limited, an
international retail business group.
Juliana Eades is the executive director of the New Hampshire Community Loan
Fund, one of the country's oldest local community economic development
institutions.
William D. Glenn II is the executive director of Continuum HIV Day Services in
San Francisco.
Mitchell Johnson is president of M.A.J. Capital Management, a money management
firm. Previously, he spent 21 years in a variety of executive positions at the
Student Loan Marketing Association (Sallie Mae).
*Robert B. Reich is a University Professor at Brandeis University and was the
22nd United States Secretary of Labor.
Ada Sanchez is the former director of the Public Service and Social Change
Program at Hampshire College.
<PAGE>
*Interested person (inside trustee)
THE ROLE OF INVESTMENT ADVISER
In order to manage Citizens Funds on a day-to-day basis, we have signed a
Management Agreement with Citizens Advisers, Inc., with offices at 230 Commerce
Way, Suite 300, Portsmouth, NH, 03801. Citizens Advisers has managed Citizens
Funds' assets since the Funds' inception in 1982. Citizens Securities, Inc., a
subsidiary of Citizens Advisers, serves as Citizens Funds' distributor.
Both Citizens Advisers and Citizens Securities are California corporations.
Sophia Collier is the 60% beneficial owner. Fellow shareholders are John P.
Dunfey, Robert J. Dunfey, Sr. and Gerald F. Dunfey, three brothers who each own
12% each; and William B. Hart, who owns 4%.
In its role as investment adviser, Citizens Advisers determines which companies
meet the fund's investment criteria and will be carried on our "Approved List."
It also selects which securities will be bought and sold for the fund.
Citizens Advisers performs a wide variety of administrative duties for Citizens
Funds under a separate administrative and shareholder services contract which
provides for reimbursement of out-of-pocket expenses as well as fees for
services rendered. Citizens Advisers sometimes will perform services under this
administrative contract directly, or may contract to have specialized services
provided by third parties, such as investment advisers for pension funds or
other institutions which maintain omnibus accounts with Citizens Funds.
Sophia Collier is the lead manager of the team that manages the Citizens Small
Cap Index Fund. Ms. Collier was the president of Citizens Funds and its
investment adviser, Citizens Advisers, until September, 1998. Currently she is
the principal owner and chair of the board of directors of Citizens Advisers.
CITIZENS FUNDS' MANAGEMENT FEES
For the services the Adviser provides to the fund it may be paid the following
fees (based on the average annual net assets of the fund):
Advisory Administrative
Fee Fee Aggregate Fees
Citizens Small Cap Index Fund
Standard shares .50% .10% .60%
Institutional Class shares .50% .10% .60%
<PAGE>
12B-1 FEES
Citizens Funds has a 12b-1 Plan which allows us to pay Citizens Securities and
other distributors of the fund's Standard shares distribution fees for the sale
and distribution of its shares. These fees reimburse these parties for
sales-related expenses including the printing of prospectuses and reports sent
to non-shareholders, as well as other sales material, advertising and salaries
for salespeople and other personnel. We also will pay commissions to outside
brokers or service organizations for similar services. Because these costs are
paid out of the fund's net assets on an on-going basis, over time these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
Under Citizens Funds' 12b-1 Plan and the related Distribution Agreement with
Citizens Securities, the following amounts are payable by the fund (expressed
as a percentage of net assets):
Citizens Small Cap Index Fund
Standard shares .25%
Institutional Class shares N/A
SHAREHOLDER INFORMATION
The fund is no load. The Standard shares of the fund are subject to 12b-1 fees.
The minimum initial investment in the fund is $2,500 for Standard shares
($1,000 for IRA, UGMA and Automatic Investment Plan accounts). The fund offers
Institutional Class shares, which require a minimum initial investment of
$100,000 ($250,000 for registered investment advisers and retirement plans, at
the discretion of Citizens Funds).
HOW WE VALUE OUR SHARES
The price of shares in the fund is called the Net Asset Value. To calculate Net
Asset Value, we add up the total assets of the fund, subtract all liabilities,
then divide by the number of shares outstanding. Since expenses differ for
Institutional Class shares, the Net Asset Value for Standard and Institutional
Class shares vary and are computed separately.
To value money market securities, we use an accounting system called the
amortized cost method. Amortized cost is approximately equal to market value.
Equity securities are valued at the closing sales price on the primary exchange
on which those securities are traded or on the principal over-the-counter
<PAGE>
market on which such securities are traded, or, lacking any sales, at the last
available bid price for domestic securities and halfway between the bid and the
asked price for international securities. If no market quotation is available
for a given security (including restricted securities which are subject to
limitations on their sale), our Adviser will fairly value that security in good
faith pursuant to the policies established by Citizens Funds' board of
trustees. Fixed income investments are generally valued at the bid price for
securities. Securities maturing within 60 days normally are valued at amortized
cost.
Securities may also be valued on the basis of valuations furnished by a pricing
service that uses both dealer-supplied evaluations and evaluation based on
analysis of market data or other factors if such valuations are believed to
reflect more accurately the fair value of such securities.
The value of our shares for the fund is determined at the close of business of
the New York Stock Exchange on each day on which it is open for trading and at
such other times we feel may be necessary or appropriate.
HOW TO BUY AND SELL SHARES
HOW TO BUY SHARES
It's easy to buy shares in the fund. Just fill out an application and send in
your payment by check, wire transfer, exchange from another Citizens mutual
fund or through arrangements with your investment adviser or broker-dealer. All
checks must be made payable to "Citizens Funds." Foreign checks drawn in U.S.
dollars are accepted but shares purchased with foreign checks may be held in
escrow for at least 20 days.
Your cost will be the Net Asset Value next determined after your payment is
received. You can purchase both full and fractional shares, which will be
rounded to the nearest 1/1000th of a share. If your purchase is returned for
any reason, you will be assessed a fee of $15.00.
Citizens Funds has authorized certain brokers, and such brokers have also been
authorized to designate intermediaries, to accept on its behalf purchase and
redemption orders. The fund will be deemed to have received such orders when
the broker or broker designee accepts the order, which shall be priced at the
Net Asset Value next computed after the broker or designee accepts the order.
Investment Minimums
The minimum initial investment for the fund is $2,500 ($1,000 for IRA, UGMA and
Automatic Investment Plan accounts). The minimum subsequent investment for all
accounts, including Automatic Investment Plan accounts, is $50. If your account
falls below the minimum for the fund, you will be assessed a monthly fee of
$3.00 until you bring your balance above the minimum. (This fee will also be
applied to inactive Automatic Investment Plan accounts.) If you do not bring
your balance up to the minimum, we may close your account by sending you a
check for your balance.
<PAGE>
The minimum initial investment in Institutional Class shares is $100,000
($250,000 for registered investment advisers and retirement plans, at the
discretion of Citizens Funds). There is no minimum subsequent investment. With
respect to accounts that fall below $100,000 (or $250,000 for registered
investment advisers and retirement plans, at the discretion of Citizens Funds),
Citizens Funds reserves the right to transfer these accounts from the
Institutional Class and convert them to Standard shares. We will give adequate
notice to the shareholder, allowing the opportunity to bring the account up to
the required minimum balance.
There is an annual fee of $10 for each Individual Retirement Account (IRA),
with a maximum IRA account fee of $20 per shareholder. This fee is waived for
IRA accounts of $15,000 and higher and total IRA balances of $25,000 and
higher.
Automatic Investment Plan
To enroll in our Automatic Investment Plan, simply check off that box on the
account application and provide us with your bank information, as well as the
amount and frequency of your investment into the fund. We will do the rest.
Payroll Deduction
Setting up direct payroll deposit is very easy. Call us for the necessary
information and steps to follow. If you or your payroll administrator have any
questions, please call our Shareholder Service Center at 1-800-223-7010.
Funds will be deposited into your Citizens Funds account using the Electronic
Funds Transfer System. We will provide the account number. Your payroll
department will let you know the date of the pay period when your investment
begins.
HOW TO SELL SHARES
Telephone Redemption
We have a Telephone Exchange and Redemption option on your account application.
Under this option, you can call and tell us how much you want to sell (redeem).
Depending upon your instructions, we will deposit the amount of your redemption
into another Citizens Funds account, mail you a check or electronically
transfer your redemption to your pre-designated account. Normally, we will send
you your redemption on the next business day after we receive your request.
One-day wired funds cost $10, or we offer free two-day service via the
Automated Clearing House (ACH). You will earn dividends up to and including the
date when we receive your redemption request.
If you do select the Telephone Exchange and Redemption option, you should be
aware it may increase the risk of error or of an unauthorized party gaining
access to your account. For added security you may provide us with a Personal
Identification Number (PIN) which must be verified before processing all
telephone transactions, including balance verification. To keep these problems
to a minimum, we record all telephone calls. But please remember, none of
<PAGE>
Citizens Funds, our Adviser or our Transfer Agent will be responsible if we
properly act on telephone instructions we reasonably believe to be genuine.
During periods of unusual market activity, severe weather or other abnormal
circumstances, it may be difficult for you to reach a representative of the
Citizens Funds by telephone. In this case, please consider sending written
instructions.
Redeem Your Shares through Broker-Dealers
You may also redeem your shares through participating broker-dealers (who may
charge a fee for this service). Certain broker-dealers may have arrangements
with Citizens Funds that permit them to order redemption of shares by telephone
or other electronic communication.
Requests for Redemption
If you do not use the Telephone Exchange and Redemption option, you can still
redeem your shares at any time, although the process will take longer. Send us
a written request together with a Medallion Signature Guarantee. We may require
further documentation from corporations, fiduciaries, retirement plans and/or
institutional investors.
We reserve the right to wait up to seven business days before paying the
proceeds of any redemption on any investments made by check and five business
days for purchases made by ACH transfer. Therefore, if you need your redemption
proceeds within seven business days of your purchase, please invest by wire.
SHAREHOLDER SERVICES AND POLICIES
We try to demonstrate our commitment to your investment success by offering a
full family of socially responsible mutual funds and providing you with a
complete range of convenient services including the following retirement
services:
o Traditional and Roth IRAs
o SEP and SIMPLE IRAs
o 401(k), 403(b) and 457 plans
o Rollover and transfer services
Please call our Shareholder Service Center for more information at
1-800-223-7010.
EXCHANGE PRIVILEGE
Since peoples' investment needs change over time, we provide for easy exchanges
among Citizens funds at no charge. You may make an exchange at any time and to
any Citizens mutual fund. Just call us or write us with your request for a
<PAGE>
prospectus for the fund you would like to exchange into. The investment
minimums and monthly below minimum balance fee remain applicable to exchange
purchases into other Citizens funds.
EXCESSIVE EXCHANGES AND MARKET TIMING
Because excessive trading can lower the fund's performance and harm
shareholders, we reserve the right to suspend or terminate the exchange
privilege of any investor who makes excessive use of the privilege (e.g., more
than five exchanges within a one year period). Your exchanges may also be
restricted or refused if we perceive a pattern of simultaneous orders affecting
significant portions of the fund's assets. In particular, a pattern of
exchanges or other transactions evidencing a so-called "market timer"
investment strategy, because they may be particularly disruptive to the fund,
may result in a termination of exchange privileges or closure of your account.
You may still redeem your shares or purchase new shares in the event that your
exchange privileges are suspended or terminated.
We also reserve the right to close your account for any lawful reason,
including, but not limited to, reasonable suspicion of fraud or other illegal
activity in connection with the account.
SYSTEMATIC WITHDRAWAL PLAN
You can send us a written request to automatically redeem a portion of your
shares and make a regular monthly, quarterly or annual payment on your behalf.
MAKING A CHANGE IN YOUR ACCOUNT
After your account is set up, you may want to make a change in one of the
options or in the account title. We are pleased to assist, but to protect both
you and Citizens Funds from fraud, we may require a Medallion Signature
Guarantee from all registered owners of the accounts.
TAX-SHELTERED RETIREMENT PLANS
Our distributor, Citizens Securities, has arranged for shareholders to have
access to qualified Individual Retirement Accounts (IRAs), Roth IRAs, SIMPLE
IRAs and 403(b) plans (for employees of non-profit organizations). The fund is
suitable for 401(k) plans and other types of retirement plans as well. Call us
for a brochure and application.
ESCROW
Redemption proceeds of shares purchased by check or ACH transfer are
unavailable for a period of time. See "How to Sell Shares - Requests for
Redemption," above.
TRANSACTIONS THAT REQUIRE MEdALLION SIGNATURE GUARANTEES
o Written request for redemption
o Changing your account title in any way
o Authorizing a telephone transaction for the first time
o Changing your predesignated wire or ACH instructions
<PAGE>
o Establishing or modifying a systematic withdrawal plan
o Exchanges between accounts which do not have identical titles
ELIGIBLE GUARANTORS
o Commercial Bank
o Trust Company
o Savings Associations
o Credit Unions
o Members of domestic stock exchange
Note: Notaries public are not eligible guarantors.
MAILING ADDRESS AND WIRING INSTRUCTIONS
REGULAR U.S. MAIL:
Please use the business reply envelope provided with this prospectus, or mail
to:
Citizens Funds
c/o PFPC Inc.
PO Box 8962
Wilmington, DE
19899-8962
WIRING INSTRUCTIONS:
Citizens Funds
c/o PNC Bank, N.A.
Philadelphia, PA
ABA#: 031000053
For Further Credit
A/C# 86-1030-3646
Shareholder name/account number
<PAGE>
OVERNIGHT DELIVERY PACKAGES (i.e., Federal Express, UPS, Airborne Express):
Send to:
Citizens Funds
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, DE 19809
Please send only overnight delivery packages to the above address. Regular U.S.
Mail will not be accepted at this address and may be returned to you.
Please make all checks payable to "Citizens Funds." We are unable to accept
third-party checks.
TRANSFER AGENT AND DIVIDEND PAYING AGENT:
PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, DE 19809
DIVIDENDS, DISTRIBUTIONS AND TAXES
Unless you give us other instructions, we will automatically reinvest your
dividends and distributions at the Net Asset Value, calculated on the date the
dividends or distributions are payable.
We also can pay your dividends and distributions to you by check or electronic
transfer through the Automated Clearing House to your bank account. Information
regarding dividends and other distributions will be included on your statement.
Dividends and distributions of capital gains, if any, are declared and paid
annually.
REDEMPTION IN KIND
The fund will normally redeem shares for cash, but may pay the redemption price
partly with portfolio securities. If portfolio securities are distributed
instead of cash, shareholders may incur brokerage commissions or other costs in
converting the securities to cash.
TAX MATTERS
The dividends you receive, whether paid in cash or reinvested in shares,
generally will be subject to federal income tax (and any applicable state or
local taxes) unless you are otherwise exempt from such taxes. Some dividends
<PAGE>
received may qualify for the dividends received deduction for corporate
shareholders. Dividends designated as capital gains dividends are taxable as
long-term capital gains. All other dividends are generally taxable as ordinary
income. We will send you a complete statement each January as to the federal
tax status of dividends and distributions paid by the fund with respect to the
previous calendar year.
Distributions will reduce the fund's Net Asset Value per share. If you purchase
shares just before the fund makes a distribution, therefore, you will pay the
full purchase price for the shares and then receive a portion of the purchase
price back as a taxable distribution.
When you redeem, sell or exchange shares of a Citizens Fund, it is generally
considered a taxable event. Depending on the purchase price and the sale price
for the shares redeemed, sold or exchanged, you may have gain or loss on the
transaction. You are responsible for any tax liabilities generated by your
transactions.
The account application asks each new investor to certify that the investor's
Social Security or taxpayer identification number is correct and that the
shareholder is not subject to 31% backup withholding for failing to report
income to the IRS. The fund may be required to withhold (and pay over to the
IRS for your credit) 31% of certain distributions and proceeds it pays you if
you fail to provide this information or otherwise violate IRS regulations.
Please consult your own tax adviser for further information regarding the
federal, state and local tax consequences of an investment in Citizens Funds.
THE YEAR 2000
Citizens Funds and its service providers could be harmed if their computer
systems do not properly process information on and after January 1, 2000 (known
as the Y2K problem). Failure to successfully address the Y2K problem could
result in interruptions to and other material adverse effects on the Funds'
business and operations, including problems in calculating Net Asset Value and
in implementing the Funds' purchase and redemption procedures. Failure to
successfully address the Y2K problem also could adversely effect the business
and operations of the companies in which Citizens Funds invests.
At Citizens Funds, we take Y2K preparedness very seriously and have endeavored
to focus the entire company on Y2K awareness and readiness. Our Y2K efforts to
date have included forming a Y2K committee and attendance at conferences and
seminars related to Y2K preparedness; preparation of a written Y2K Plan;
adoption of Y2K budgets for 1999 and 2000; preparation of a written contingency
plan; communications and coordination with our transfer agent, custodian,
sub-advisers, vendors and other third parties with whom our systems interface;
and reporting to our Board of Trustees on Y2K preparedness.
<PAGE>
Our Y2K Plan includes inventory and assessment of all internal and external
systems, both mission-critical and non mission-critical; training; internal
testing; point-to-point testing; correction and replacement of systems; vendor
and third party assessment and monitoring; contingency planning and
implementation. Included within this Y2K Plan is an assessment and monitoring
of the Y2K preparedness of all companies whose securities are recommended for
inclusion in our mutual fund portfolios. Vendor and third party assessment and
monitoring includes written requests for information and statements, periodic
reporting and regularly scheduled teleconferences.
As a security measure, we recommend keeping all printed statements from all
your financial institutions from now into the 21st century. This will enable
you to compare records after January 1, 2000 to verify an accurate record of
your information.
<PAGE>
PAGE ___ SIDEBAR
WHAT ARE EQUITY SECURITIES?
Equity securities represent an ownership interest in a company or other issuer
of the security. Equity securities may be listed on a securities exchange or
traded in the over-the-counter markets and generally consist of:
o common stocks
o securities that are convertible into common stocks
o preferred stocks
o warrants for the purchase of stocks
o depositary receipts, which are receipts issued by U.S. or foreign
banks or financial institutions that represent shares of the
securities listed above
PAGE ___ SIDEBAR
WHAT ARE FIXED INCOME SECURITIES?
Fixed income securities represent a debt obligation of their issuer and pay a
fixed interest rate. Fixed income securities generally include:
o bonds
o U.S. government and agency securities,
o mortgage-backed and asset-backed securities
o short-term obligations, such as commercial paper
o certificates of deposit
PAGE ___ SIDEBAR
[PHOTO]
John Shields became President of Citizens Funds on September 1, 1998.
"Ours is an increasingly complicated world. Too often, we create more problems
for ourselves by ignoring a basic human trait, common sense, which is at the
heart of Citizens' social investment philosophy. As a 25-year veteran of the
mutual fund industry, I have gained a broad view and diverse set of
experiences. With this perspective, I am especially committed to Citizens'
fundamental philosophy: that a social and environmental screening process
provides added insight into a company's potential performance and, therefore,
is a smarter and potentially more profitable approach to investing."
<PAGE>
PAGE ___ SIDEBAR
[PHOTO]
Azie Taylor Morton, Chair of our Board of Trustees, explains Citizens Funds'
relationship with its adviser.
"One of the Citizens Fund's most important contracts is our Management
Agreement with Citizens Advisers. It states that Citizens Advisers has
authority to manage our funds and will provide all necessary office space,
facilities, equipment and personnel to do so."
[CITIZENS FUNDS LOGO]
Printed on recycled paper with soy-based ink.
(C)1999 Citizens Advisers
Citizens Small Cap Index(TM) is a trademark of Citizens Advisers.
<PAGE>
Citizens Funds' Statement of Additional Information contains more detailed
information about the fund and its management and operations. The Statement of
Additional Information is incorporated by reference into this prospectus and is
legally part of it.
To make inquiries about the fund, call 1-800-223-7010 or visit Citizens Funds'
web site at www.citizensfunds.com.
Information about Citizens Funds (including the Statement of Additional
Information) can be reviewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. For more information
call 1-800-SEC-0330. Reports and other information about Citizens Funds are
available on the Commission's Internet site at www.sec.gov and copies may be
obtained, upon payment of a duplicating fee, by writing the Public Reference
Section of the Commission, Washington, D.C. 20549-6009.
SEC File No. 811-3626
<PAGE>
CITIZENS FUNDS
CITIZENS SMALL CAP INDEX FUND
STATEMENT OF ADDITIONAL INFORMATION
________ __, 1999
This Statement is not a prospectus and should be read in conjunction with the
Citizens Small Cap Index Fund's Prospectus dated_________ __, 1999. A copy of
the current Prospectus can be obtained by calling (800) 223-7010, or by writing
Citizens Funds, 230 Commerce Way, Suite 300, Portsmouth, New Hampshire 03801.
This Statement of Additional Information and the Prospectus may be amended or
supplemented from time to time.
TABLE OF CONTENTS PAGE
Citizens Funds.............................................................
Investment Strategies, Risks and Fundamental Policies .....................
Trustees, Officers and Beneficial Owners...................................
Investment Advisory and Other Services.....................................
Brokerage Allocation and Soft Dollars......................................
Ownership of Shares and Shareholder Rights.................................
How We Value Fund Shares...................................................
Tax Matters................................................................
How We Calculate Performance...............................................
Financial Statements.......................................................
<PAGE>
CITIZENS FUNDS
Citizens Funds (the "Trust") is a Massachusetts business trust and
presently consists of six separate series: Working Assets Money Market Fund
(inception date 8/30/83), Citizens Income Fund (inception date 6/10/92),
Citizens Emerging Growth Fund (inception date 2/8/94), Citizens Global Equity
Fund (inception date 2/8/94), Citizens Index Fund (inception date 3/3/95) and
Citizens Small Cap Index Fund (inception date 6/30/99). On May 28, 1992 the
Trust, which had operated as a money market fund since 1983, changed its name
from Working Assets Money Fund to Working Assets Common Holdings. On October 5,
1995 the Trust changed its name from Working Assets Common Holdings to Citizens
Investment Trust, and on July 14, 1998 it changed its name to Citizens Funds.
This Statement of Additional Information relates to Citizens Small Cap
Index Fund (the "fund"), both to Standard and Institutional Class shares.
INVESTMENT STRATEGIES, RISKS AND FUNDAMENTAL POLICIES
Citizens Funds is a diversified, open-end investment company.
INVESTMENT STRATEGIES AND RISKS
In addition to the principal investment strategies and risks described in
the Prospectus, Citizens Funds will from time to time employ other investment
strategies which are described below.
Money Market Instruments
During periods of unusual market conditions, or for liquidity purposes or
pending the investment of the proceeds of the sale of fund shares, we may
invest all or a portion of the assets of the fund in money market instruments,
including, but not limited to:
o obligations of the U.S. Government or its agencies;
o certificates of deposit of banks; and
o commercial paper or other corporate notes of investment grade quality.
Repurchase Agreements
We may also enter into repurchase agreements with primary dealers or banks
which are members of the Federal Reserve, secured by instruments issued or
guaranteed by agencies or instrumentalities of the U.S. Government, the values,
including accrued interest, of which are equal to or greater than the
repurchase price agreed to be paid by the seller. The repurchase price may be
higher than the purchase price, the difference being income to the fund, or the
purchase and repurchase prices may be the same, with interest at a standard
rate due to the fund, together with the repurchase price on repurchase. In
either case, the income to the fund is unrelated to the interest rate on
securities collateralizing the repurchase.
We require all vendors of repurchase agreements to set aside collateral in
the fund's name in the form of government securities equal to 102% of the value
of any repurchase agreement. However, it is important to note that while
repurchase agreements may be a useful tool in managing the fund, they do have
some greater risk than directly investing in securities. If a bank or
stockbroker becomes bankrupt, or otherwise defaults after selling us a
repurchase agreement, we may suffer some delay and expense in liquidating the
securities, decline in the value of the securities and loss of principal or
interest.
<PAGE>
Derivative Securities
OPTIONS. The fund may from time to time buy and write (sell) options on
securities, securities indexes, and foreign currencies that are traded on
recognized securities exchanges and over-the-counter markets. The value of
options is determined by the performance of the underlying financial benchmarks
or indexes to which they are tied. A call option gives the holder (buyer) the
right to purchase a security or currency at a specified price (the exercise
price) at any time until or on a certain date (the expiration date). A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until or on the expiration date. The premium that
the fund receives for buying or writing a call or put option is deemed to
constitute the market value of an option. Aggregate premiums paid for put and
call options will not exceed 5% of the fund's total assets at the time of each
purchase. The premium that the fund will receive from writing a call option
will reflect, among other things, the current market price of the underlying
investment, the relationship of the exercise price to such market price, the
historical price volatility of the underlying investment, and the length of the
option period. These instruments are often referred to as "derivatives" which
may be defined as financial instruments whose performance is derived, at least
in part, from the performance of another asset (such as a security, currency or
an index of securities). The fund may use these techniques to hedge against
changes in interest rates, foreign currency exchange rates, changes in
securities prices or other factors affecting the value of its investments, or
as part of its overall investment strategies. The fund will maintain segregated
accounts consisting of liquid assets (or, as permitted by applicable
regulations, enter into certain offsetting positions to cover its obligations
under derivatives transactions).
WARRANTS. The fund also may invest in warrants. Warrants are instruments
that entitle the holder to buy underlying equity securities at a specific price
for a specific period of time. Such warrants are typically held on the fund's
books at zero value when market quotations are unavailable, as the value of
these warrants can only be realized upon their exercise.
RISKS. The use of derivative securities depends on the fund manager's
ability to predict correctly the direction of interest rates, securities prices
or other factors. Risks include:
o the risk that interest rates, securities prices or other factors do
not move in the directions being hedged against, in which case the
fund will have incurred the cost of the derivative (either its
purchase price or, by writing an option, losing the opportunity to
profit from increases in the value of the securities covered) with no
tangible benefits;
o an imperfect correlation between the price of derivatives and the
movements of the securities prices, interest rates or currency
exchange rates being hedged;
o the possible absence of a liquid secondary market for any particular
derivative at any time;
o the potential loss if the counterparty to the transaction does not
perform as promised; and
o the possible need to defer closing out certain positions to avoid
adverse tax consequences.
Options may present additional risks because the fund managers may
determine that exercise of the option will not benefit the fund, and therefore
the amount invested to acquire the option will be lost. Also, the fund may be
required to purchase at a disadvantage a security on which it has sold a put
option.
<PAGE>
Warrants tend to be more volatile than the underlying securities on which
they are based and cease to have value if they are not exercised prior to their
expiration date. In addition, changes in the value of a warrant do not
necessarily correspond to changes in the value of the underlying securities.
Foreign Securities
The fund may invest in foreign securities which meet the Trust's social
and financial criteria. Investing in foreign securities generally presents a
greater degree of risk than investing in domestic securities due to possible
exchange rate fluctuations or controls, less publicly available information,
more volatile markets, less securities regulation, less favorable tax
provisions, war or expropriation. As a result of any investments in foreign
securities, the fund may receive interest or dividend payments, or the proceeds
of the sale or redemption of such securities, in the foreign currencies in
which such securities are denominated. Under certain circumstances - such as
where we believe that the applicable exchange rate is unfavorable at the time
the currencies are received or we anticipate, for any other reason, that the
exchange rate will improve - the fund may hold such currencies for an
indefinite period of time. The fund may also hold foreign currency in
anticipation of purchasing foreign securities. While the holding of currencies
would permit the fund to take advantage of favorable movements in the
applicable exchange rate, such strategy also would expose the fund to risk of
loss if exchange rates move in a direction adverse to the fund's position. Such
losses could reduce any profits or increase any losses sustained by the fund
from the sale or redemption of securities and could reduce the dollar value of
interest or dividend payments received.
When-Issued Securities
The fund may purchase securities on a "when-issued" or on a "forward
delivery" basis. It is expected that, in many cases, the fund will take
delivery of securities it has purchased on a "when-issued" basis. When the fund
commits to purchase a security on a when-issued or forward delivery basis it
will set up procedures consistent with current policies of the Securities and
Exchange Commission (the "SEC") concerning such purchases. Since those policies
currently recommend that an amount of fund assets equal to the amount of the
purchase be held aside or segregated to be used to pay for the commitment, we
intend that the fund will always have cash, short-term money market instruments
or high quality debt securities sufficient to cover any commitments or to limit
any potential risk. However, although we do not intend to make such purchases
for speculative purposes and we intend to adhere to current regulatory policies
with respect to such purchases, purchases of securities on such bases may
involve more risk than other types of purchases. For example, the fund may have
to sell assets which have been set aside to cover its commitments in order to
meet redemptions. Also, if the fund's adviser, Citizens Advisers, Inc.
("Citizens Advisers" or the "Adviser"), were to determine that it is necessary
to sell the when-issued or forward delivery securities before delivery to the
fund, the fund may incur a loss because of market fluctuations since the time
the commitment to purchase the securities was made. When the time comes to pay
for when-issued or forward delivery securities, the fund will meet its
obligations from the then-available cash flow on the sale of securities, or,
although it would not normally expect to do so, from the sale of the
when-issued or forward delivery securities themselves (which may have a value
greater or less than the fund's payment obligation).
Private Placements and Illiquid Investments
The fund may invest up to 10% of its net assets in securities for which
there is no readily available market. The fund will not buy these illiquid
securities unless the assets in the fund exceed $10 million at the time of
purchase. Illiquid securities may include privately placed restricted
securities for which no institutional market exists. The absence of a trading
market can make it difficult to determine a market value for illiquid
securities. Disposing of illiquid securities may involve time-consuming
<PAGE>
negotiation and legal expenses, and it may be difficult or impossible for the
fund to sell them promptly at an acceptable price.
Rule 144A Securities
The fund may purchase securities that are not registered ("restricted
securities") under the Securities Act of 1933, but can be offered and sold to
"qualified institutional buyers" under Rule 144A under the Securities Act.
However, the fund will not invest more than 10% of its net assets (taken at
market value) in illiquid investments, which include securities for which there
is no readily available market, securities subject to contractual restrictions
on resale and restricted securities, unless, in the case of restricted
securities, the Board of Trustees of the Trust determines, based on the trading
markets for the specific restricted security, that it is liquid. The Trustees
have adopted guidelines and, subject to oversight by the Trustees, have
delegated to the Adviser the daily function of determining and monitoring
liquidity of restricted securities. See "Fundamental Policies" below.
FUNDAMENTAL POLICIES
The following are fundamental investment policies followed by the fund.
Any policy identified as a fundamental investment policy of the fund may be
amended only with approval of the holders of a majority of the outstanding
shares of the fund (a "Majority Shareholder Vote"), which as used herein means
the vote of the lesser of (a) 67% or more of the outstanding voting securities
of the fund present at a meeting at which the holders of more than 50% of the
outstanding voting securities of the fund are present or represented by proxy,
or (b) more than 50% of the outstanding voting securities of the fund. The term
"voting securities" has the same meaning as in the Investment Company Act of
1940, as amended (the "1940 Act").
1. Subject to the provisions of our Declaration of Trust, which provides
that we may issue several classes of shares in any one fund, we may
not issue senior securities. We may not issue securities that have
priority over others in dividends, redemption rights, or have other
privileges. We must limit our involvement in "illiquid instruments,"
that is, repurchase agreements that have a term of more than seven
days, and securities that have restrictions on resale or lack readily
available market quotations, to 10% of the total value of the fund's
net assets and we will buy no such securities for the fund unless the
assets in the fund exceed $10 million at the time of purchase.
Private Placements which may be traded pursuant to Rule 144A under
the Securities Act of 1933 will not be subject to these limitations,
if our Board of Trustees finds that a liquid trading market exists
for these securities. Our Trustees will review on an ongoing basis
any determination by the Adviser to treat a restricted security as a
liquid security, including the Adviser's assessment of current
trading activity and the availability of reliable price information.
In determining whether a privately placed security is properly
considered a liquid security, the Adviser and our Trustees will take
into account the following factors: (i) the nature of the security
and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the
mechanics of transfer); (ii) dealer undertakings to make a market in
the security; and (iii) the number of dealers willing to purchase or
sell the security and the number of other potential purchasers. To
the extent the fund invests in restricted securities that are deemed
liquid, the general level of illiquidity in the fund may be increased
if qualified institutional buyers become uninterested in purchasing
these securities or the market for these securities contracts.
Acquisitions of such liquid restricted securities will be made from a
list approved by our Trustees.
<PAGE>
2. The fund may borrow only under special circumstances. We do not
normally borrow money, but for temporary purposes the fund may borrow
from banks up to 10% of the fund's total assets. If we borrow, we can
pledge our assets up to the amount borrowed. The fund cannot borrow
to purchase securities or to increase its income, but can borrow to
pay for shares being redeemed so that we do not have to sell
securities we do not want to sell. The fund will not purchase any
securities while the fund has borrowings above 5% of assets
outstanding. The interest paid on our borrowings would reduce our net
income.
3. The fund may not underwrite securities, which means we may not sell
securities for others.
4. The fund may not buy the securities of any company if the fund would
then own more than 10% of the total value of all of the company's
outstanding voting securities, or if the Trust as a whole would then
own more than 10% of the total value of all of the company's
outstanding voting securities. The fund may not concentrate its
investments by buying the securities of companies in any one industry
if more than 25% of the value of total assets would then be invested
in that industry; however, obligations issued or guaranteed by the
U.S. Government, its agencies and instrumentalities, and obligations
of domestic branches of domestic banks, are not included in this
limit.
5. As a general policy, the fund will not invest in real estate assets
or interests therein. This policy does not preclude the fund from
investing in debt instruments secured by real estate or holding
interests in real estate investment trusts or other real estate
companies.
6. The fund may not invest in limited partnerships, including those
which own commodities, oil, gas and mineral leases or real estate.
This restriction is not interpreted to prevent the fund from
investing in fixed income securities or other debt instruments issued
by limited partnerships provided that it does not become a general or
limited partner.
7. The fund may not make loans other than pursuant to repurchase
agreements. When we buy money market instruments or loan
participation interests, we are investing, not making a loan.
8. The fund may not invest for the purpose of exercising control or
management of other companies.
9. The fund may not buy or continue to hold securities if our Trustees
or officers or the Directors or officers of the Adviser own more than
certain limits of these securities. If all of these people who own
more than 1/2 of 1% of the shares of a company together own more than
5% of the company's shares, we cannot buy, or continue to own, that
company's shares.
10. The fund may not participate with others on a joint, or a joint and
several, basis in any trading account in any securities.
11. We try not to put all our eggs in one basket. This means that, in
managing 75% of the fund's assets, we will never invest more than 5%
in any one company. We do not invest more than 25% of the value of
the fund in one industry, with the exception of securities of U.S.
Government agencies or enterprises.
<PAGE>
12. There is a limit on the fund's ability to loan fund securities. If
the fund loans securities, then it must maintain collateral at 100%
of the value of the securities and any collateral must be marketable
on an exchange.
If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in
values or assets will not constitute a violation of that restriction.
TEMPORARY DEFENSIVE POSITIONS
The fund may invest in cash, cash equivalents, money market instruments
and repurchase agreements as temporary defensive positions during volatile or
other adverse or unusual market, economic, political or economic conditions.
Such temporary defensive positions would be inconsistent with the fund's
principal investment strategies and may adversely impact fund performance.
PORTFOLIO TURNOVER
For the fund we may purchase both equity and fixed income securities and
hold them until such time as we believe it is advisable to sell them in order
to realize a gain or loss whereupon we reinvest these assets in other
securities.
TRUSTEES, OFFICERS AnD BENEFICIAL OWNERS
We have a Board of Trustees that oversees and monitors the management of
the Trust. These oversight responsibilities include selection of the investment
adviser and election of officers, who are in turn responsible for the day to
day operations of the Trust. The Trustees and officers are listed below. The
Trustees who are "interested persons," as defined in the 1940 Act ("Interested
Trustees"), are indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------- ----------------------- -------------------------------------------
NAME, ADDRESS POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
AND AGE TRUST DURING PAST 5 YEARS
- ---------------------------------- ----------------------- -------------------------------------------
Azie Taylor Morton, Chair of the Board and Investment adviser
10910 Medfield Court, Austin, Trustee
TX 78739
63 years
- ---------------------------------- ----------------------- -------------------------------------------
William D. Glenn, II Trustee and Former Psychotherapist and Executive Director of
915 Las Ovejas, San Rafael, CA Chair Continuum HIV Day Services
94903
51 years
- ---------------------------------- ----------------------- -------------------------------------------
Sophia Collier Trustee Portfolio Manager Citizens Funds (since
230 Commerce Way, Suite 300, 1995);
Portsmouth, NH 03801 Chair of the Board of Directors, Citizens
43 years Advisers (since 1991);
President, Citizens Funds and Citizens
Advisers (1991 to September 1998)
- ---------------------------------- ----------------------- -------------------------------------------
<PAGE>
- ---------------------------------- ----------------------- -------------------------------------------
John L. Shields Trustee and President President and Chief Executive Officer of
230 Commerce Way, Suite 300, Citizens Advisers (since September 1998);
Portsmouth, NH 03801 Senior Management Consultant, Cerulli
46 years Associates (1995 to 1998);
Senior Vice President and Chief
Administrative Officer, Chief Operating
Officer and Chief Financial Officer,
State Street Research Investment
Services, Inc. (1991 to 1995)
- ---------------------------------- ----------------------- -------------------------------------------
Juliana Eades Trustee Executive Director, New Hampshire
7 Wall Street, Concord, NH Community Loan Fund (since 1984)
03301
46 years
- ---------------------------------- ----------------------- -------------------------------------------
Lokelani Devone Trustee Assistant General Counsel, DFS Group
525 Market Street, 33rd floor, Limited (international retail business
San Francisco, CA 94105 group) (since 1989)
42 years
- ---------------------------------- ----------------------- -------------------------------------------
Ada Sanchez Trustee Student (since 1996)
111 90th Avenue, Treasure
Island, FL 33706
47 years
- ---------------------------------- ----------------------- -------------------------------------------
Robert B. Reich Trustee University Professor and the Maurice B.
4 Mercer Circle, Cambridge, MA Hexter Professor of Social and Economic
02138 Policy, Brandeis University and its
53 years Heller Graduate School (since 1996);
Former U.S. Secretary of Labor
- ---------------------------------- ----------------------- -------------------------------------------
Mitchell Johnson, Trustee President, M.A.J. Capital Management,
2753 Unicorn Lane NW, Inc.(money management firm) (since August
Washington, DC 20015 1994);
57 years Senior Vice President of Corporate
Finance, Student Loan Marketing
Association (1987 to 1994)
- ---------------------------------- ----------------------- -------------------------------------------
Joseph F. Keefe Secretary Executive Vice President and General
230 Commerce Way, Suite 300, Counsel, Citizens Advisers (since May
Portsmouth, NH 03801 1997);
45 years Partner, Hall, Hess,Kenison, Stewart,
Murphy & Keefe (law firm) (1984 to 1997)
- ---------------------------------- ----------------------- -------------------------------------------
<PAGE>
- ---------------------------------- ----------------------- -------------------------------------------
Sean Driscoll Treasurer Fund Accountant, Vice President, Director
230 Commerce Way, Suite 300, of Fund Administration and Director of
Portsmouth, NH 03801 Fund Accounting, Citizens Advisers (since
34 years October 1998);
Director of Fund Administration, State
Street Bank and Trust Company (March
1998 to November 1998);
Vice President of Compliance, Putnam
Investments (January 1997 to March 1998);
Fund Accountant and Director of Fund
Administration, State Street Bank and Trust
Company (1987 to 1997)
- ---------------------------------- ----------------------- -------------------------------------------
Crescentia True Vice President Executive Vice President, Operations,
230 Commerce Way, Suite 300, Citizens Advisers (since 1994)
Portsmouth, NH 03801
36 Years
- ---------------------------------- ----------------------- -------------------------------------------
</TABLE>
Our Board of Trustees functions with a Nominating Committee comprised of
the whole Board, but pursuant to the Trust's Distribution Plan, we have agreed
that Trustees who are not "interested persons," as defined in the 1940 Act, of
the Trust and who have no direct or indirect financial interest in the
operation of the Distribution Plan or any agreement relating to the Plan (the
"Independent Trustees") shall have responsibility for the selection and
nomination of other Independent Trustees. This agreement will continue for so
long as the Distribution Plan is in effect.
The following compensation table discloses the aggregate compensation from
the Trust for services provided through June 30, 1999. None of the Trustees
receive pension or retirement benefits or any other compensation beyond that
listed below. Trustees were, however, reimbursed the costs of travel, meals and
lodging associated with attendance at meetings.
CITIZENS FUNDS- COMPENSATION TABLE
NAME OF PERSON AND AGGREGATE COMPENSATION FROM
POSITION CITIZENS FUNDS
Azie Taylor Morton $[____]
Juliana Eades $[____]
William D. Glenn, Jr. $[____]
Ada Sanchez $[____]
Lokelani Devone $[____]
Mitchell Johnson $[____]
Sophia Collier* 0
John S. Shields* 0
Robert B. Reich* 0
<PAGE>
* Sophia Collier, John Shields and Robert B. Reich are Interested Trustees and
received no compensation from Citizens Funds.
INVESTMENT ADVISORY AND OTHER SERVICES
ADVISER
The fund is advised by Citizens Advisers, Inc. under a contract known as
the Management Agreement. The Adviser's office is at 230 Commerce Way, Suite
300, Portsmouth, New Hampshire 03801. The Adviser is a California corporation.
The Management Agreement provides that the Adviser, subject to the control of
the Trust's Board of Trustees, will decide which securities will be bought and
sold, and when, and requires the Adviser to place purchase and sale orders. The
Adviser also manages the day-to-day operations of the Trust.
Sophia Collier individually owns 60% of the outstanding stock and is Chair
of the Board of Directors of Citizens Advisers, Inc. She is the former
President of Citizens Funds and remains on the Board of Trustees, serving as an
Interested Trustee. Ms. Collier is the founder of American Natural Beverage
Corp., the maker of Soho Natural Soda, a company which Ms. Collier co-founded
in her Brooklyn kitchen when she was 21 years old and built up over the next 12
years to an enterprise with 52 employees and retail sales of $25 million. Soho
Soda was the first natural soda in America and was created as an alternative to
unhealthful mass market sodas. Ms. Collier and her partners sold American
Natural Beverage Corp. in 1989.
Four other individuals own the remaining 40% of the outstanding stock of
Citizens Advisers, Inc., as follows: John F. Dunfey (12%); Robert J. Dunfey,
Sr. (12%); Gerald F. Dunfey (12%); and William B. Hart, Jr. (4%). John, Robert
and Gerald Dunfey, brothers, now serve as directors of the Dunfey Group, a
venture capital and investment firm. John P. Dunfey is also a member of the
Board of Directors of Citizens Advisers. The Dunfey family has been associated,
over a number of years, with progressive social and political causes and has
actively participated in organizations dedicated to world peace, human and
civil rights, and economic justice. The family founded and continues to sponsor
New England Circle, a forum for the "discussion of social, political, literary
and educational topics that can lead to constructive change in our lives, our
nation and our world."
John Shields is the President and Chief Executive Officer of Citizens
Advisers, Inc. and President of Citizens Funds. He also serves on the Board of
Trustees of Citizens Funds as an Interested Trustee. Prior to joining Citizens
Advisers in 1998, Mr. Shields was a senior management consultant with Cerulli
Associates, a mutual fund consulting firm located in Boston, Massachusetts. He
also held executive and other managerial positions with State Street Global
Advisers and Fidelity Investments.
ADVISER FEES
The Adviser provides us, at its own expense, with all office space,
facilities, equipment and clerical personnel necessary to carry out its duties
under the Management Agreement. Some of the Trust's Trustees and officers are
employees of the Adviser and receive their compensation from the Adviser. The
custodian bank for the fund maintains, as part of its services for which the
Trust pays a fee, many of the books and records that the fund is required to
have and computes the fund's Net Asset Value and dividends per share.
<PAGE>
The fund pays the Adviser a fee for its services of 0.50% of the fund's
average annual net assets.
The Adviser has agreed to limit the fund's expenses each year. If expenses
exceed this limit, the Adviser will reduce its fee by, or refund, the amount of
the excess. The limit on expenses is as follows:
- ---------------------------------- ---------------------------------------
Expense Limitation
Standard shares 1.55% of average annual net assets
- ---------------------------------- ---------------------------------------
Institutional Class shares .90% of average annual net assets
- ---------------------------------- ---------------------------------------
Not all fund expenses are subject to the limits described above. Interest
expenses, taxes, brokerage commissions, and extraordinary expenses, such as
litigation, that do not usually occur in the operations of a mutual fund are
not included.
The fund commenced operations on June 30, 1999 and will not pay any fees
to the Adviser until fiscal year 2000.
CITIZENS SECURITIES, INC.
Citizens Securities, Inc. ("Citizens Securities" or the "Distributor"), a
wholly-owned subsidiary of the Adviser and a California corporation, serves as
the fund's principal underwriter or distributor. Its offices are located at 230
Commerce Way, Suite 300, Portsmouth, New Hampshire 03801. John Shields, the
President and CEO of Citizens Advisers, is also President and CEO of Citizens
Securities.
ADMINISTRATIVE AND SHAREHOLDER SERVICES
Citizens Advisers also performs a wide variety of administrative duties
for the Trust under a separate administrative and shareholder services contract
which provides for reimbursement of out of pocket expenses as well as fees for
services rendered. These fees and expenses are payable monthly and are based on
average annual net assets in the following amounts:
- ---------------------------------- ---------------------------------------
Administrative Fee
- ---------------------------------- ---------------------------------------
Standard shares 0.10%
Institutional Class shares 0.10%
- ---------------------------------- ---------------------------------------
The administrative services provided to the Trust include but are not
limited to the following: daily fund accounting duties including payment and
budgeting of fund operating expenses and calculation of expense accruals;
administration of annual Trust audit with Trust Auditors; supervision of
drafting and printing of annual and semi annual reports; administrative and
contractual interface with Custodian and Transfer Agent including daily
monitoring of Net Asset Value, sales, redemptions, dividends and quality
control; and compliance with federal and state regulatory requirements.
Citizens Advisers is also reimbursed at cost for state Blue Sky filing and
reporting services; vendor relations; drafting and filing of Prospectuses and
statements of additional information, proxies and other regulatory filings; and
special projects.
In addition, Citizens Securities provides a number of administrative
services to the Trust relating primarily to shareholder services and
communications, and is reimbursed a flat fee approximating the "market price"
<PAGE>
of such services. These include but are not limited to answering calls from
existing shareholders in a timely manner; maintenance of a toll-free number;
responding to shareholder inquiries and requests; maintenance of computer
interface with Transfer Agent; retention, maintenance and research of
shareholder records; maintenance of facilities and equipment to perform all
such duties; and similar services.
The fund commenced operations on June 30, 1999 and will not pay any
administrative and shareholder service fees until fiscal year 2000.
The fund is responsible for the cost of preparing and setting in type
Prospectuses and reports to shareholders and distributing copies of the
Prospectuses and reports to shareholders. The fund's distributor, Citizens
Securities, pays the cost of printing and distributing copies of Prospectuses
and reports to non-shareholders, as well as the costs of supplemental sales
literature and advertising. The Trust pays all of the fund's other expenses not
expressly assumed by the Adviser such as interest, taxes, audit and legal fees
and expenses, charges of the fund's custodian, the fund's shareholder
servicing, transfer and record-keeping agent costs, insurance premiums, stock
issuance and redemption costs, certain printing costs, costs of registering
shares of the fund under federal and state laws, and dues and assessments of
the Investment Company Institute, as well as any non-recurring expenses,
including litigation.
12B-1 PLAN
Pursuant to a Distribution Agreement, Citizens Securities acts as the
distributor of the fund's shares.
The Trust's Board of Trustees has adopted a Distribution Plan under
Section 12(b) of the 1940 Act and Rule 12b-1 thereunder. In approving the 12b-1
Plan, the Trustees determined that there is a reasonable likelihood that the
Plan will benefit the Trust and its shareholders. Pursuant to this Plan, the
Distributor is authorized to purchase advertising, sales literature and other
promotional material and to pay its own salespeople. In addition,
broker-dealers and other service organizations that enter into written
agreements with the Trust and its Distributor may receive, for administration,
shareholder service and distribution assistance, fees at rates determined by
the Trustees.
We will reimburse Citizens Securities for distribution expenditures and
for fees paid to service organizations, up to a limit of 0.25% of average
annual net assets for the fund's Standard shares. There is no provision under
the Distribution Plan for reimbursing Citizens Securities for expenditures on
behalf of the fund's Institutional Class shares. In addition, if and to the
extent that the fee we pay the Distributor as well as other payments we make
are considered as indirectly financing any activity which is primarily intended
to result in the sale of fund shares, such payments are authorized under the
Plan.
The 12b-1 Plan provides that the Distributor shall provide and the
Trustees shall review quarterly reports setting forth the amounts, payments and
the purpose for which the amounts were expended. The Plan only permits
reimbursement of actual expenses and does not permit expenses to be carried
forward from one fiscal period to another.
The 12b-1 Plan will continue in effect if approved at least annually by
the Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no financial interest in the
operation of the Plan or in any agreement related to the Plan. These Trustees
are known as "Qualified Trustees." Agreements related to the Plan must also be
<PAGE>
approved in the same manner by a vote of the Trustees and the Qualified
Trustees. These agreements will terminate automatically if assigned, and may be
terminated at any time, without payment of any penalty, by a vote of the
majority of the Qualified Trustees or a vote of the majority of outstanding
securities of the Trust, or the fund, on not more than 60 days notice. The Plan
further provides that, while it is in effect, the selection and nomination of
the Trustees who are not interested persons shall be committed to the
discretion of the Qualified Trustees. The Plan may not be amended to increase
materially the amounts to be spent without shareholder approval, and all
amendments must be approved by the Trustees.
EXPENSES
Other expenses paid by the fund include all expenses not expressly assumed
by Citizens Advisers. These include interest, taxes, audit and legal fees,
custodian and transfer agent charges, insurance premiums, cost of registering
shares under federal and state laws, dues and any litigation costs, as well as
the cost of typesetting, printing and distributing shareholder reports and
Prospectuses sent to shareholders.
Institutional Class shareholders in the fund pay their pro rata portion of
fund expenses, as well as any class expenses attributable to Institutional
Class shares only. Class expenses include, but are not limited to, transfer
agent fees and administrative and shareholder fees and expenses such as the
cost of registering shares under state laws, the cost of typesetting, printing
and distributing shareholder reports and Prospectuses.
When a cost is shared by several series of the Trust, the staff at
Citizens Advisers will allocate the expense in a reasonable manner under the
supervision of the Board of Trustees.
OTHER SERVICE PROVIDERS
Custodian
State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts, is the custodian of the assets of the Trust. The custodian is
responsible for holding the securities and cash of the fund, receiving and
reporting all purchases and redemptions, calculating the daily Net Asset Value
of the fund and other accounting activities related to the management of the
Trust. The custodian takes no part in determining the investment policies of
the Trust or in deciding which securities are purchased or sold by the Trust.
We, however, may invest in obligations of the custodian and may purchase or
sell securities from or to the custodian.
Transfer Agent
The transfer agent and dividend-paying agent for the Trust is PFPC, Inc.,
400 Bellevue Parkway, Suite 108, Wilmington, DE 19809. In its capacity as
transfer agent and dividend-paying agent, PFPC is responsible for processing
daily purchases, redemptions and transfers of Trust shares, preparing and
mailing shareholder confirmations and account statements, paying dividends and
other distributions, and other shareholder and account activities.
Auditors
The Trust has retained as its Independent Accountants the firm of
PricewaterhouseCoopers LLP, One Post Office Square, Boston, Massachusetts,
02109. PricewaterhouseCoopers LLP will conduct an annual audit of the financial
statements of the fund, will prepare the fund's federal and state income tax
returns and consult with management of the fund as to matters of accounting,
regulatory filings, and federal and state income taxation.
<PAGE>
Legal Counsel
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts.
BROKERAGE ALLOCATION AND SOFT DOLLARS
The Adviser seeks to obtain for us the best net price and the most
favorable execution of orders. Purchases are made from issuers, underwriters,
dealers or brokers, and banks who specialize in the types of securities we buy.
Purchases from underwriters include a commission or concession paid by the
issuer to the underwriters. Purchases from dealers include the spread between
the bid and asked prices and purchases from brokers include commissions paid to
the broker based upon the transaction size. If the execution and price offered
by more than one dealer are comparable, the order may be given to a dealer who
has provided research advice, quotations on portfolio securities or other
services.
The Adviser will comply with Rule 17e-1 under the 1940 Act in regards to
brokerage transactions with affiliates, to assure that commissions will be fair
and reasonable to the shareholders.
In connection with the selection of brokers or dealers and the placing of
portfolio securities transactions, the Adviser may select brokers or dealers
who also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) to the fund
and/or the other accounts over which the Adviser exercises investment
discretion. The Adviser may pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for
the fund that is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser has with respect to accounts
over which they exercise investment discretion.
The Adviser will maintain an account with one or more broker-dealers who
agree to provide or pay for brokerage and research services which benefit the
fund. In the event that best execution of an equity transaction is available
through a broker-dealer that has been so identified, the Adviser may place the
transaction with that broker-dealer after determining in good faith that the
amount of the commission is reasonable in relation to the value of the
brokerage and research services provided.
Any excess commissions, or "soft dollars," generated by transactions on
behalf of the fund in this fashion shall be used solely to purchase brokerage
and research services within the meaning of Section 28(e), and must be of
benefit to the fund. These brokerage and research services, however, need not
exclusively benefit the fund, and may also benefit other series of the Trust or
other clients of the Adviser. For these purposes, brokerage and research
services mean those which provide assistance to the Adviser in the performance
of decision-making responsibilities. If a product or service serves
non-research as well as research functions, "soft dollars" shall be used to pay
for the product or service only to the extent that it constitutes research.
The investment management or advisory fee that the Trust pays to the
Adviser will not be reduced as a consequence of the Adviser's receipt of
brokerage and research services. While such services are not expected to reduce
<PAGE>
the expenses of the Adviser, the Adviser would, through the use of such
services, avoid the additional expenses which would be incurred if it should
attempt to develop comparable information through its own staff or obtain such
services independently.
OWNERSHIP OF SHARES AND SHAREHOLDER RIGHTS
The Trust's Declaration of Trust permits its Trustees to issue an
unlimited number of full and fractional shares of beneficial interest and to
divide or combine the shares into a greater or lesser number of shares without
thereby changing the proportionate beneficial interests in the Trust.
Certificates representing shares are not issued. The Trust may create and issue
series and classes of shares. Each share of each class of each series
represents an equal proportionate interest in the series with each other share
of that class. Shares of each series participate equally in the earnings,
dividends and distribution of net assets of the particular series upon
liquidation or dissolution (except for any differences among classes of shares
in a series). Income and operating expenses are allocated fairly among the
series and classes by the Trustees. Shares of each class are entitled to vote
as a class or series only to the extent required by the 1940 Act, as provided
in the Declaration of Trust, or as permitted by the Trustees. We intend to
manage our series in such a way as to be a "diversified" investment company, as
defined in the 1940 Act.
VOTING RIGHTS
Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares) and may vote in the election of
Trustees and on other matters submitted to meetings of shareholders. Voting is
generally by class and series except as otherwise provided by the provisions of
the 1940 Act and the Trust's Declaration of Trust. The Trust does not hold
annual shareholder meetings. However, the Trustees will call a meeting of
shareholders to vote on the removal of a Trustee upon the written request of
the record holders of ten percent of our shares. No amendment may be made to
the Declaration of Trust without a Majority Shareholder Vote. The holders of
shares have no preemptive, conversion or subscription rights and votes are not
cumulative. Shares when issued are fully paid and non assessable, except as set
forth under "Shareholder and Trustee Liability" below. The Trust may be
terminated upon the sale or transfer of its assets, if such sale or transfer is
approved by a Majority Shareholder Vote. If not so terminated, the Trust will
continue indefinitely.
DIVIDENDS AND DISTRIBUTIONS
The fund normally declares and pay dividends substantially equal to all
net investment income annually. Net investment income consists of non-capital
gain income less expenses. Net realized short-term capital gains, if any, and
net realized long-term capital gains, if any, will be distributed by the fund
at least annually. Dividends and capital gains distributions are automatically
reinvested at Net Asset Value in additional shares, unless a shareholder elects
cash distributions. Cash distributions will be paid annually.
SHAREHOLDER AND TRUSTEE LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable as partners for the
obligations of the Trust. The Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for the Trust's acts or obligations and
<PAGE>
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by us or the Trust's Trustees. The
Declaration of Trust provides for indemnification and reimbursement of expenses
by the relevant series out of that series' property for any shareholder held
personally liable for that series' obligations. The Declaration of Trust also
provides that the Trust shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust and satisfy
the judgment thereon. Thus, the risk of a shareholder incurring financial loss
on account of shareholders liability is highly unlikely and is limited to the
relatively remote circumstances in which the Trust would be unable to meet its
obligations.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he or
she would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct
of his or her office.
HOW TO PURCHASE AND REDEEM SHARES
How to Buy Shares
It's easy to buy shares in the fund. Just fill out an application and send
in your payment by check, wire transfer, exchange from another Citizens mutual
fund or through arrangements with your investment adviser or broker-dealer. All
checks must be made payable to "Citizens Funds." Foreign checks drawn in U.S.
dollars are accepted but shares purchased with foreign checks may be held in
escrow for at least 20 days.
Your cost will be the Net Asset Value next determined after your payment
is received. (Net Asset Value is determined at the close of the New York Stock
Exchange.) You can purchase both full and fractional shares, which will be
rounded to the nearest 1/1000th of a share. If your purchase is returned for
any reason, you will be assessed a fee of $15.00.
The Trust has authorized certain brokers, and such brokers have also been
authorized to designate intermediaries, to accept on its behalf purchase and
redemption orders and such brokers are also authorized to designate
intermediaries to accept orders on the Trust's behalf. The Trust will be deemed
to have received such orders when the broker or broker designee accepts the
order, which shall be priced at the Net Asset Value next computed after the
broker or designee accepts the same.
Investors may be charged a fee if they buy, sell or exchange fund shares
through a broker or agent.
Investment Minimums
The minimum initial investment for Standard shares in the fund is $2,500
($1,000 for IRA, UGMA and Automatic Investment Plan accounts). The minimum
subsequent investment for all accounts, including Automatic Investment Plan
accounts, is $50. If your account falls below the minimum, you will be assessed
a monthly fee of $3.00 until you bring your balance back up over the minimum.
If you do not bring your balance up to the minimum, we may close your account
by sending you a check for your balance. The investment minimums and monthly
below minimum balance fee are applicable per account and also apply to an
exchange purchase of shares in another series of Citizens Funds.
The minimum initial investment in Institutional Class shares is $100,000
($250,000 for registered investment advisers and retirement plans, at the
discretion of the Trust). There is no minimum subsequent investment. With
respect to accounts that fall below $100,000 (or $250,000 for registered
investment advisers and retirement plans, at the discretion of the Trust), the
<PAGE>
Trust reserves the right to transfer these accounts from the Institutional
Class and convert them to Standard shares. We will give adequate notice to the
shareholder, allowing the opportunity to bring the account up to the required
minimum balance.
There is an annual fee of $10 for each Individual Retirement Account
(IRA), with a maximum IRA account fee of $20 per shareholder. This fee is
waived for IRA accounts of $15,000 and higher and total IRA balances of $25,000
and higher.
Automatic Investment Plan
To enroll in the Trust's Automatic Investment Plan, simply check off that
box on the account application and provide us with your bank information, as
well as the amount and frequency of your investment into the fund. We will do
the rest.
Payroll Deduction
Setting up direct payroll deposit is very easy. Call us for the necessary
information and steps to follow. If you or your payroll administrator have any
questions, please call the Trust's Shareholder Service Department.
Funds will be deposited into your account using the Electronic Funds
Transfer System. We will provide the account number. Your payroll department
will let you know the date of the pay period when your investment begins.
How to Sell Shares
Telephone Exchange and Redemption. We have a Telephone Exchange and
Redemption option on your account application. Under this option, you can call
and tell us how much you want to redeem. Depending upon your instructions, we
will deposit the amount of your redemption into another Citizens Funds account,
mail you a check or electronically transfer your redemption to your
pre-designated account. Normally, we will send you your redemption on the next
business day after we receive your request. One-day wired funds cost $10, or we
offer free two-day service via the Automated Clearing House (ACH). You will
earn dividends up to and including the date when we receive your redemption
request.
If you do select the Telephone Exchange and Redemption option, you should
be aware it may increase the risk of error or of an unauthorized party gaining
access to your account. For added security you may provide us with a Personal
Identification Number (PIN) which must be verified before processing all
telephone transactions, including balance verification. To keep these problems
to a minimum, we record all telephone calls. But please remember, neither the
Trust, the Adviser nor the fund's Transfer Agent will be responsible if we
properly act on telephone instructions we reasonably believe to be genuine.
Redeem Your Shares through Broker-Dealers. You may also redeem your shares
through participating broker-dealers (who may charge a fee for this service).
Certain broker-dealers may have arrangements with the Trust that permit them to
order redemption of shares by telephone or other electronic communication.
Requests for Redemption. If you do not use the Telephone Exchange and
Redemption option, you can still redeem your shares at any time, although the
<PAGE>
process will take longer. Send us a written request together with a Medallion
Signature Guarantee. We may require further documentation from corporations,
fiduciaries, retirement plans and/or institutional investors.
We reserve the right to wait up to seven business days before paying the
proceeds of any redemption on any investments made by check and five business
days for purchases made by ACH transfer. Therefore, if you need your redemption
proceeds within seven business days of your purchase, please invest by wire.
Additional Redemption Information
We pay redemption proceeds within five business days (seven business days
with respect to redemptions of investments made by check) after we receive a
proper redemption request so long as the redemption request is received by 4
p.m., Eastern Time. The fund's obligation to pay for redemptions can be
suspended when the New York Stock Exchange is closed other than for weekends or
holidays or under certain emergency conditions determined by the SEC. The
holidays on which the New York Stock Exchange is closed are: New Year's Day,
Martin Luther King, Jr.'s. Birthday (observed), Presidents' Day (observed),
Good Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.
The fund pays redemption proceeds in cash, except that the Board of
Trustees has the power to decide that conditions exist which would make cash
payments undesirable. In that case, the fund could send redemption payments in
securities from that fund, valued in the same way the fund's Net Asset Value is
determined. There might then be brokerage or other costs to the shareholder in
selling these securities. The fund has elected to be governed by Rule 18f-1
under the 1940 Act, which requires the fund to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the fund's total net assets during any 90
day period for any one shareholder. A shareholder's redemption proceeds may be
more or less than his or her original cost, depending on the value of the
fund's shares.
We have the right to compel the redemption of shares of the fund if the
aggregate Net Asset Value of the shares in the account is less than $2,500 for
Standard shares ($1,000 for IRAs, UGMA and Automatic Investment Plan accounts).
If the Adviser decides to do this, we will provide notice to the shareholder,
who will be given an opportunity to bring the account up to the applicable
minimum. With respect to Institutional Class shares, we also have the right to
transfer these accounts and to convert them to Standard shares if the aggregate
Net Asset Value of the shares in the account is less than $100,000 ($250,000
for registered investment advisers and retirement plans, at the discretion of
the Trust).
HOW WE VALUE FUND SHARES
The value of the fixed income securities the fund may invest in will
fluctuate depending in large part on changes in prevailing interest rates.
Fixed income securities may comprise a portion of assets in the fund under
normal conditions. If interest rates go up, the value of fixed income
securities generally goes down. Conversely, if interest rates go down, the
value of fixed income securities generally goes up. Long-term obligations,
which often have higher yields, may fluctuate in value more than short-term
ones. Changes in interest rates can have a significant effect on the value of
non-money market fixed income securities.
The value of equity securities held in the fund will fluctuate based upon
market conditions and changes in the management and fundamental financial
<PAGE>
condition of the issuing company, prevailing economic and competitive
conditions in the industry sectors in which the company does business and other
factors which affect individual securities and the equity market as a whole.
The Net Asset Value per share of the fund is determined for each class by
adding the market value of all securities and other assets attributable to the
class, then subtracting the liabilities attributable to that class, and then
dividing the result by the number of outstanding shares of the class. All
expenses are accrued daily and taken into account in determining Net Asset
Value.
The Net Asset Value of the fund is determined at the time the New York
Stock Exchange closes on each day on which the New York Stock Exchange is open
for regular trading and at such other times as we feel may be necessary or
appropriate.
As described in the Prospectus, shares of the fund are generally valued on
the basis of market values. Equity securities are valued at the last sales
price on the primary exchange on which such securities are traded or on the
principal over-the-counter market on which such securities are traded, or,
lacking any sales, at the last available bid price for domestic securities and
halfway between the bid and asked price for international securities. Fixed
income investments are generally valued at the bid price for securities.
Securities maturing within 60 days are normally valued at amortized cost.
Securities and other assets for which market quotations are not readily
available (including restricted securities, if any) are appraised at their fair
value as determined in good faith under consistently applied procedures under
the general supervision of the Trust's Board of Trustees.
Securities may also be valued on the basis of valuations furnished by a
pricing service that uses both dealer-supplied valuations and evaluation based
upon analysis of market data or other factors if such valuations are believed
to reflect more accurately the fair value of such securities.
Use of a pricing service has been approved by the Trust's Board of
Trustees. There are a number of pricing services available, and the Trustees
and officers of the Trust acting on behalf of the Trustees, may use or
discontinue the use of any pricing service now, or in the future, employed.
TAX MATTERS
TAXATION OF THE FUND
FEDERAL TAXES. The fund is treated as a separate entity for federal tax
purposes under the Internal Revenue Code of 1986, as amended (the "Code").
Further, the fund has elected to be treated and intends to qualify as a
"regulated investment company" under Subchapter M of the Code. We plan to
continue this election in the future. As a regulated investment company, the
fund will not be subject to any federal income or excise taxes on its net
investment income and net realized capital gains that it distributes to
shareholders in accordance with the timing requirements imposed by the Code. If
the fund should fail to qualify as a regulated investment company in any year,
the fund would incur federal income taxes upon its taxable income and
distributions from the fund would generally be taxable as ordinary dividend
income to shareholders.
FOREIGN TAXES. Although we do not expect the fund will pay any federal
income or excise taxes, investment income, if any, received by the fund from
sources within foreign countries may be subject to foreign income taxes
<PAGE>
withheld at the source. The United States has entered into tax treaties with
many foreign countries which may entitle the fund to a reduced rate of tax or
an exemption from tax on foreign income; the fund intends to qualify for treaty
reduced rates where available. It is not possible, however, to determine the
fund's effective rate of foreign tax in advance, since the amount, if any, of
the fund's assets to be invested within various countries is not known. If the
fund incurs foreign income taxes we do not expect that it will be able to pass
through to shareholders foreign tax credits with respect to such foreign taxes.
MASSACHUSETTS TAXES. As long as the fund maintains its status as a
regulated investment company under the Code and distributes all of its income,
the fund will not be required to pay any Massachusetts income or excise tax.
TAXATION OF SHAREHOLDERS
TAXATION OF DISTRIBUTIONS. Shareholders of the fund will generally have to
pay federal income taxes on the dividends and capital gain distributions they
receive from the fund. Dividends from ordinary income and any distributions
from net short-term capital gains are taxable to shareholders as ordinary
income for federal income tax purposes, whether the distributions are made in
cash or in additional shares. Distributions of net capital gains (i.e., the
excess of net long-term capital gains over net short-term capital losses),
whether made in cash or in additional shares, are taxable to shareholders as
long-term capital gains without regard to the length of time the shareholders
have held their shares. Any fund dividend that is declared in October,
November, or December of any calendar year, that is payable to shareholders of
record in such a month, and that is paid the following January, will be treated
as if received by the shareholders on December 31 of the year in which the
dividend is declared.
DIVIDENDS-RECEIVED DEDUCTION. A portion of any ordinary income dividends
paid by the fund is normally eligible for the dividends received deduction for
corporations if the recipient otherwise qualified for that deduction with
respect to its holding of the fund's shares. Availability of the deduction to
particular corporate shareholders is subject to certain limitations and
deducted amounts may be subject to the alternative minimum tax and result in
certain basis adjustments. Any portion of the fund's dividends that is derived
from investments in foreign corporations will not qualify for such deduction.
"BUYING A DIVIDEND." Any dividend or distribution from the fund will have
the effect of reducing the per share Net Asset Value of shares in the fund by
the amount of the dividend or distribution. Shareholders purchasing shares in
such the fund shortly before the record date of any taxable dividend or other
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
SPECIAL CONSIDERATIONS FOR NON-U.S. PERSONS. Dividends and certain other
payments to persons who are not citizens or residents of the United States or
U.S. entities ("Non-U.S. Persons") are generally subject to U.S. tax
withholding at the rate of 30%. The fund intends to withhold U.S. federal
income tax at the rate of 30% (or at such lower rate as may be permitted under
an applicable treaty) on taxable dividends and other payments to Non-U.S.
Persons that are subject to such withholding. Any amounts overwithheld may be
recovered by such persons by filing a claim for refund with the U.S. Internal
Revenue Service within the time period appropriate to such claims.
Distributions from the fund to a Non-U.S. Person also may be subject to tax
under the laws of the Non-U.S. Person's jurisdiction.
BACKUP WITHHOLDING. The fund is required in certain circumstances to apply
backup withholding at the rate of 31% on taxable dividends and redemption
<PAGE>
proceeds paid to any shareholder (including a Non-U.S. Person) who does not
furnish to the fund certain information and certifications or who is otherwise
subject to backup withholding. Backup withholding will not, however, be applied
to payments that have been subject to the 30% withholding applicable to
Non-U.S. Persons.
DISPOSITION OF SHARES. In general, any gain or loss realized upon a
taxable disposition of shares of the fund by a shareholder that holds such
shares as a capital asset will be treated as a long-term capital gain or loss
if the shares have been held for more than twelve months and otherwise as a
short-term capital gain or loss. However, any loss realized upon a disposition
of the shares in the fund held for six months or less will be treated as a
long-term capital loss to the extent of any distributions of net capital gain
made with respect to those shares. Any loss realized upon disposition of shares
may also be disallowed under the rules relating to wash sales.
EFFECTS OF CERTAIN INVESTMENTS AND TRANSACTIONS
CERTAIN DEBT INSTRUMENTS. An investment by the fund in certain securities
purchased at a market discount would cause the fund to recognize income prior
to the receipt of cash payments with respect to those securities. In order to
distribute this income and avoid a tax on the fund, the fund may be required to
liquidate portfolio securities that it might otherwise have continued to hold,
potentially resulting in additional taxable gain or loss to the fund.
OPTIONS, ETC. Any fund transactions in options, futures and forward
contracts will be subject to special tax rules that may affect the amount,
timing and character of fund income and distributions to shareholders. For
example, certain positions held by the fund on the last business day of each
taxable year will be marked to market (e.g., treated as if closed out) on that
day, and any gain or loss associated with the positions will be treated as 60%
long-term and 40% short-term capital gain or loss. Certain positions held by
the fund that substantially diminish its risk of loss with respect to other
positions in its portfolio may constitute "straddles," and may be subject to
special tax rules that would cause deferral of fund losses, adjustments in the
holding periods of fund securities, and conversion of short-term into long-term
capital losses. Certain tax elections exist for straddles that may alter the
effects of these rules. The fund intends to limit its activities in options,
futures and forward contracts to the extent necessary to meet the requirements
of the Code.
FOREIGN INVESTMENTS. Special tax considerations apply with respect to any
foreign investments of the fund. For example, any foreign exchange gains and
losses realized by the fund generally will be treated as ordinary income or
loss. Use of non-U.S. currencies for non-hedging purposes and investments by
the fund in "passive foreign investment companies" may have to be limited in
order to avoid a tax on the fund. The fund may elect to mark to market any
investments in "passive foreign investment companies" on the last day of each
taxable year. This election may cause the fund to recognize ordinary income
prior to the receipt of cash payments with respect to those investments; in
order to distribute this income and avoid a tax on the fund, the fund may be
required to liquidate portfolio securities that it might otherwise have
continued to hold potentially resulting in additional gain or loss to the fund.
The foregoing is limited to a discussion of federal taxation. It should
not be viewed as a comprehensive discussion of the items referred to nor as
covering all provisions relevant to investors. Dividends and distributions may
also be subject to state or local taxes. Shareholders should consult their own
tax advisers for additional details on their particular tax status.
<PAGE>
HOW WE CALCULATE PERFORMANCE
All performance reported in advertisements is historical and not intended
to indicate future returns.
TOTAL RETURN AND OTHER QUOTATIONS
We can express investment results in terms of "total return." Total return
refers to the total change in value of an investment in the fund over a
specified period.
In calculating the total return of a class of shares of the fund, we start
with the total number of shares of the fund you can buy for $1,000 at the
beginning of the period. We then add all the additional shares you would have
purchased within the period with reinvested dividends and distributions (this
takes into account the particular fund's income, if any). Finally, we multiply
the number of these shares by the Net Asset Value on the last day of the period
and divide the result by the initial $1,000 investment to see the fund's
percentage gain or loss. For periods of more than one year, we adjust the
cumulative total return to get an average annual total return.
These figures will be calculated according to the SEC formula:
P(1 + T)n = ERV
where:
P = A hypothetical initial payment of $1,000.
T = Average annual total return.
n = Number of years.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year periods at the end of the 1, 5 or 10 year
periods (or fractional portion).
Because the fund is newly organized, performance information is not
available as of the date of this Statement of Additional Information.
When we quote the fund's total return we are referring to its past results
and not predicting the fund's future performance. We quote total return for the
most recent one year period as well as average annual total return for the most
recent five- and ten-year periods, or from the time when we first offered
shares, whichever is shorter. Sometimes we advertise the fund's actual return
quotations for annual or quarterly periods or quote cumulative return for
various periods. When we do this, we also always present the standardized total
return quotations at the same time.
When we quote investment results, we sometimes will compare them to
unmanaged market indices such as the Dow Jones Industrial Average, Standard &
Poor's 500 ("S&P 500"), S&P MidCap 400 Index, S&P SmallCap 600 Index, Financial
Times World Index, Lehman Government/ Corporate Intermediate Index and the
Russell 2000, as well as other data and rankings from recognized independent
publishers or sources such as Morningstar, Inc., Lipper, Inc., IBC's Money Fund
Report, Bloomberg Magazine, Money Magazine, Mutual Funds Magazine, Kiplinger's
Personal Finance Magazine, Worth Magazine, Your Money Magazine, Smart Money
Magazine, Forbes Magazine, Fortune Magazine, Co-Op America Quarterly, The Green
Money Journal and others.
<PAGE>
FINANCIAL STATEMENTS
The fund has not yet issued financial statements.
<PAGE>
PART C: OTHER INFORMATION
Item 23 Exhibits
(a) Declaration of Trust******
(b) By-Laws*
(c) N/A
(d) Management Agreement:
(1) Management Agreement******
(2) Renewal of Management Agreement******
(3) Form of Sub-Investment Advisory Agreement**
(4) Amended Sub-Investment Advisory Agreement*****
(e) Distribution Agreement:
(1) Distribution Agreement, as amended
(2) Renewal of Distribution Agreement
(3) Amendment to Distribution Agreement dated May 6, 1996**
(4) Amendment to Distribution Agreement dated May 30, 1996**
(5) Form of Letter Agreement adding Citizens Small Cap Index
Fund to the Distribution Agreement
(f) N/A
(g) Custodian Contract:
(1) Custodian Contract***
(2) Form of Letter Agreement adding Citizens Small Cap Index
Fund to the Custodian Contract
(h) Other Material Contracts:
(1) Administrative Services Agreement, as amended******
(2) Amendment to Services Administrative Agreement**
(3) Form of Letter Agreement adding Citizens Small Cap Index
Fund to the Administrative Services Agreement
(i) Opinion and Consent of Counsel as to the legality of the
securities being registered**** and filed herewith
(j) N/A
(k) N/A
(l) N/A
(m) Rule 12b-1 Distribution Plan******
(n) N/A
(o) Form of Rule 18f-3 Plan
(p) Powers of attorney***** and filed herewith
* Incorporated by reference to Post-Effective Amendment No. 38 to the
Registrant's Registration Statement (File No. 2-80886), as filed with
the Securities and Exchange Commission on October 7, 1997.
<PAGE>
** Incorporated by reference to Post-Effective Amendment No. 34 to the
Registrant's Registration Statement (File No. 2-80886), as filed with
the Securities and Exchange Commission on June 21, 1996.
*** Incorporated by reference to Post-Effective Amendment No. 35 to the
Registrant's Registration Statement (File No. 2-80886), as filed with
the Securities and Exchange Commission on September 27, 1996.
**** Incorporated by reference to the Registrant's Registration Statement on
N-14 (File No. 2-80886), as filed with the Securities and Exchange
Commission on September 5, 1997.
***** Incorporated by reference to Post-Effective Amendment No. 40 to the
Registrant's Registration Statement (File No. 2-80886), as filed with
the Securities and Exchange Commission on December 11, 1997.
****** Incorporated by reference to Post-Effective Amendment No. 42 to the
Registrant's Registration Statement (File No. 2-80886), as filed with
the Securities and Exchange Commission on August 28, 1998.
Item 24. Persons Controlled by or under Common Control with the Fund
o See the Prospectus and the Statement of Additional
Information regarding the Registrant's control relationships.
o Citizens Funds is a Massachusetts business trust.
o Citizens Advisers, Inc., the investment adviser to the
Registrant, is a California corporation, which also controls
the distributor of the Registrant, Citizens Securities, Inc.,
which is also a California corporation.
Item 25. Indemnification
Article Seventh of the Declaration of Trust filed as Exhibit a
to the Registration Statement is incorporated by reference.
Citizens Funds participates in a group liability policy under
which it and its trustees, officers and affiliated persons, the
adviser and the distributor are insured against certain
liabilities.
Item 26. Business and other Connections of Investment Adviser
Other businesses, professions, vocations, or employment of a
substantial nature in which each director or principal officer
of Citizens Advisers, Inc. is or has been, at any time during
the last two fiscal years, engaged for his or her own account or
in the capacity of director, officer, employee, partner or
trustee are as follows:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Name and Position Connection with and
With Investment Adviser Name of Other Company
John L. Shields, Trustee, Citizens Funds
President, CEO President, Citizens Securities, Inc.
Senior Consultant, Cerulli Associates (1995 to 1998)
Sophia Collier, Trustee, Citizens Funds
Chair of Board President, Citizens Funds and
Citizens Advisers, Inc. (1991 to 1998)
President, Northpoint Technology, LTD
President, NPT, Inc.
John P. Dunfey, Chairman and Director, Dunfey Brothers Capital Group
Partner President, Treasurer & Director, DA-TRIAD, Inc.
Trustee and Governor, Dana-Farber Cancer Inst., Boston
Chair, Human Rights Project, Inc.
Chair, New England Circle, Inc.
Director, International League for Human Rights, NY
Robert J. Dunfey, Sr. Treasurer & Founding Director, Dunfey Brothers Capital
Partner Group
Trustee, the Jackson Laboratory, Bar Harbor, Maine
Past Director, KeyBank of Maine
Trustee, University of Maine System
Treasurer and Director, New England Circle, Inc.
Director, American Ireland Fund, Boston
Founder & Honorary Director, Susan L. Curtis
Foundation, Portland, Maine
Gerald Dunfey, Vice President & Founding Director, Dunfey Brothers
Partner Capital Group
Director, DA-TRIAD, Inc.
President, New England Circle, Inc.
Director, Martin Luther King Center for Nonviolent Social
Change
Board of Advisors, Fund for a Free South Africa
Board of Incorporators, Joslin Diabetes Center
William Hart, Director, SIS Bank, Springfield, MA
Partner Director, Blue Cross/Blue Shield of NH
President, Dunfey Brothers Capital Group
Director, DA-TRIAD, Inc.
Director, National Trust for Historic Preservation
Director, American Academy in Rome
<PAGE>
Director, Currier Gallery of Art
Director, Berwick Academy, Berwick, Maine
</TABLE>
Item 27. Principal Underwriters
(a) Not applicable.
(b) The following are directors and officers of Citizens Funds'
distributor, Citizens Securities, Inc.: John L. Shields,
President, 230 Commerce Way, Suite 300, Portsmouth, NH. Ms.
Collier is also an interested trustee of the Registrant and
Chair of the investment adviser or management company,
Citizens Advisers, Inc.
(c) Not applicable.
Item 28. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of
1940, as amended, and the rules under that act are kept at
Citizens Funds' Transfer and Dividend Distributing Agent, PFPC,
Inc., 400 Bellevue Pkwy., Wilmington, DE 19808, and at Citizens
Funds' Custodian and Fund Accounting Agent, State Street Bank
and Trust, One Heritage Drive, North Quincy, MA 02171.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment Company
Act, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Portsmouth and State of New Hampshire on the 14th day of April, 1999.
CITIZENS FUNDS
By /s/ Joseph F. Keefe
--------------------------
Joseph F. Keefe, Secretary
/s/ John L. Shields
- -------------------------- Trustee, President,
(John L. Shields) Principal Executive,
Financial and
Accounting Officer
Azie Taylor Morton*
- -------------------------- Trustee
(Azie Taylor Morton)
William Glenn*
- -------------------------- Trustee
(William Glenn)
Ada Sanchez*
- -------------------------- Trustee
(Ada Sanchez)
Sophia Collier*
- -------------------------- Trustee
(Sophia Collier)
Juliana Eades*
- -------------------------- Trustee
(Juliana Eades)
Lokelani Devone*
- -------------------------- Trustee
(Lokelani Devone)
Robert B. Reich*
- -------------------------- Trustee
(Robert B. Reich)
<PAGE>
Mitchell Johnson*
- -------------------------- Trustee
(Mitchell Johnson)
* By Joseph F. Keefe Attorney in Fact /s/ Joseph F. Keefe
---------------------
See Powers of Attorney dated December 1, 1997, filed with the commission on
December 11, 1997.
<PAGE>
EXHIBIT INDEX
(e)(1) Distribution Agreement, as amended
(e)(2) Renewal of Distribution Agreement
(e)(5) Form of Letter Agreement adding Citizens Small Cap Index Fund
to the Distribution Agreement
(g)(2) Form of Letter Agreement adding Citizens Small Cap Index Fund
to the Custodian Contract
(h)(3) Form of Letter Agreement adding Citizens Small Cap Index Fund
to the Administrative Services Agreement
(i) Opinion and Consent of Counsel as to the legality of the
securities being registered
(o) Form of Rule 18f-3 Plan
(p) Powers of attorney
Exhibit e(1)
DISTRIBUTION AGREEMENT
This Agreement, made as of the 16th day of May, 1992 between WORKING
ASSETS Common Holdings, a Massachusetts business trust (the "Fund"), and
Working Assets Capital Management, a California Corporation (the "Distributor")
for one year June 1, 1992 - May 31, 1993.
WHEREAS, the Fund proposes to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "40 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "34 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
'NASD');
WHEREAS, the Fund intends to commence a continuous offering of its Shares
of Beneficial Interest, no par value (the 'Shares'), and
WHEREAS, the Fund desires the Distributor to act as distributor of its
shares in connection with the continuous offering thereof, in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the Distributor as
its exclusive agent to sell and to arrange for the sale of the Fund's Shares,
on the terms and for the period set forth in this Agreement, and the
Distributor hereby accepts such appointment and agrees to act hereunder. It is
understood and agreed that the services of the Distributor hereunder are not
exclusive, and the Distributor may act as principal underwriter for the shares
of any other registered investment company.
<PAGE>
2. Offering and Sale of Shares.
(a) Solicitation of Orders. The Distributor shall use its best
efforts (but only in those states in which the Distributor may lawfully do so)
to obtain from investors unconditional orders for the sale of Shares authorized
for issuance by the Fund and which are registered under the Securities Act of
1933 (the "33 Act"). The Distributor shall not be obligated, however, to
register or maintain its registration as a broker or dealer under the states
securities laws of any jurisdiction if, in the judgment of the Distributor,
such registration is not practicable or feasible. The Distributor may in its
discretion reject any order to purchase Shares.
(b) Sale of Shares. The Distributor agrees to sell the Fund's Shares,
as agent for the Fund, upon the terms described in the Fund's then current
prospectus. This may include the imposition of a sales charge, also known as a
sales load, which be retained by the Distributor or paid to others as provided
in the then current prospectus. The Distributor shall not be obligated to sell
any certain number of Shares. Upon acceptance by the Distributor of an order
for the purchase of Fund Shares, the Distributor shall promptly transmit such
order to the Fund's shareholder servicing agent. A purchase order shall be
deemed effective at the time and in the manner set forth in the Fund's then
current prospectus. The Distributor shall not make any short sales of Shares.
(c) Transmission of Purchase Price. The Distributor shall promptly
transmit any funds received by it from investors in payment of the purchase
price or Shares sold through it to the Fund's shareholder servicing agent.
3. Duties of the Fund.
(a) Maintenance of Federal Registration. The Fund shall take, from
time to time, all necessary action and such steps, including payment of the
related filing fee, as may be necessary to register and maintain registration
of an indefinite number of a Shares under the '33 Act. The Fund agrees to file
from time to time such amendments, reports and other documents as may be
necessary in order that there may be no untrue statement of a material fact in
a registration statement or prospectus, or necessary in order that there may be
no untrue statement of a material fact in a registration statement or
prospectus, or necessary in order that there may be no untrue statement of a
material fact in a registration statement or prospectus, or necessary in order
that there may be no omission to state a material fact in the registration
statement or prospectus which omission would make the Statements therein
misleading.
<PAGE>
(b) Maintenance of "Blue Sky" Qualifications. The Fund shall use its
best efforts to qualify and maintain the qualification of an appropriate number
of Shares for sale under the securities laws of such states as the Distributor
and the Fund may approve, and, if necessary or appropriate in connection
therewith, to qualify and maintain the qualification of the Fund as a broker or
dealer in such states; provided that the Fund shall not be required to amend
its Declaration of Trust or By-Laws to comply with the laws of any state, to
maintain an office in any state, to change the terms of the offering of the
Shares in any state, to change the terms of the offering of the Shares in any
state from the terms set forth in its then current prospectus, to qualify as a
foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering and sale of
the Shares. The Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Fund in
connection with such qualifications.
(c) Copies of Reports and Prospectus. The Fund shall keep the
Distributor fully informed with regard to its affairs and shall furnish to the
Distributor copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in connection with the
distribution of Shares, including one certified copy, upon request by the
Distributor, of all financial statements prepared for the Fund by independent
public accountants and such reasonable number of copies of its most current
prospectus and annual and interim reports as the Distributor may request and
shall cooperate fully in the efforts of the Distributor to sell and arrange for
the sale of the Shares and in the performance of the Distributor under this
Agreement.
4. Expenses.
(a) Expenses Paid by the Fund. The Fund shall pay all expenses:
(i) in connection with the preparation, setting in type and
filing of any registration statement and prospectus under the '33 Act and/or
the '40 Act, and any amendments or supplements that may be made from time to
time;
(ii) in connection with the registration and qualification of
Shares for sale in the various states in which the fund shall determine it
advisable to qualify such Shares for sale (including registering of the Fund as
broker or dealer or any officer or the Fund or other person as agent or
salesman of the Fund in any state.);
<PAGE>
(iii) of preparing, setting in type, printing and mailing any
report or other communication to shareholders of the Fund in their capacity as
such;
(iv) of preparing, setting in type, printing and mailing
prospectuses annually to existing shareholders (if the Fund shall elect to do
so);
(v) in connection with the issue and transfer of Shares
resulting from the acceptance by the Distributor or orders to purchase Shares
placed with the Distributor by investors; including the expenses of confirming
such purchase orders; and (vi) of any issue taxes or (in the case of Shares
redeemed) any initial transfer taxes.
(b) Expenses Paid by the Distributor. The Distributor will (unless
such expenses are to be paid by the Fund under any plan adopted by the Fund
pursuant to Rule 12b-1 under the '40 Act) pay or cause to be paid all expenses:
(i) of printing and distributing any prospectus or reports
prepared for its use in connection with the distribution of Shares to the
public;
(ii) of preparing, setting in type, printing and mailing any
other literature used by the Distributor in connection with distribution of the
Shares to the public;
(iii) of advertising in connection with the distribution of such
Shares to the public;
(iv) incurred in connection with its registration as a broker
or dealer or the registration or qualification of its officers, partners,
directors or representatives under Federal and state laws; and
(v) incurred in connection with the sale and offering for
sale of Shares which have not been herein specifically allocated as between the
Fund and Distributor.
5. Conformity with Applicable Laws and Rules. The Distributor agrees that
in selling Shares hereunder it shall conform in all respects with the laws
of the United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
<PAGE>
6. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, partners, directors, employees, or representatives is or
shall be an employee of the Fund in the performance of the Distributors duties
hereunder. The Distributor shall be responsible for its own conduct and the
employment, control, and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employee taxes thereunder.
7. Indemnification.
(a) Indemnification of Fund. The Distributor agrees to indemnify and
hold harmless the Fund and each of its trustees, officers, employees,
representatives and each person, if any, who controls the Fund within the
meaning of Section 15 of the '33 Act against any and all losses, liabilities,
damages, claims or expenses (including the reasonable costs or investigating or
defending any alleged loss, liability, damage, claims or expense and reasonable
legal counsel fees incurred in connection therewith) to which the Fund or such
of its trustees, officers, employees, representatives or controlling person may
become subject under the '33 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by the Distributor or any of the
Distributors partners, directors, officers, employees or representatives, or
(ii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, shareholder
report or other information covering Shares filed or made public by the Fund or
any amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such statement or
omission was made in reliance upon information furnished to the Fund by the
Distributor. In no case (i) is the Distributor's indemnity in favor of the
Fund, or any person indemnified to be deemed to protect the Fund or such
indemnified person against any liability to which the Fund or such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement or (ii) is the Distributor to be
<PAGE>
liable under its indemnity agreement contained in this Paragraph in respect to
any claim made against the Fund or such person, as the case may be, shall have
notified the Distributor in writing of the claim within a reasonable time after
the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Fund or upon such person
(or after the Fund or such person shall have received notice to such service on
any designated agent). However, failure to notify the Distributor of any such
claim shall not relieve the Distributor from any liability which the
Distributor may have to the Fund or any person against whom such action is
brought otherwise than on account of the Distdbutor's indemnity agreement
contained in this Paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense, or, if the Distributor so elects, to assume to defense of any suit
brought to enforce any such claim, but, if the Distributor elects to assume the
defense, such defense shall be conducted by legal counsel chosen by the
Distributor and satisfactory to the Fund, to its trustees, officers, employees
or representatives, or to any controlling person or persons, defendant or
defendants, in the suit. In the event that the Distributor elects to assume the
defense of any such suit and retain such legal counsel, the Fund, its trustees,
officers, employees, representatives or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Distributor does not elect to
assume the defense of any such suit, the Distributor will reimburse the Fund,
such trustees, officers, employees, representatives or controlling person or
persons, defendant or defendants in such suit for the reasonable fees and
expenses of any legal counsel retained by them. The Distributor agrees to
promptly notify the Fund of the commencement of any litigation of proceedings
against it or any of its partners, officers, employees or representatives in
connection with the issue or sale of any Shares.
(b) Indemnification of the Distributor. The Fund agrees to indemnify
and hold harmless the Distributor and each of its partners, officers,
employees, representatives and each person, if any, who controls the
Distributor within the meaning of Section 15 of the '33 Act against any and all
losses, liabilities, damages, claims or expenses (including the reasonable
costs of investigating or defending any alleged loss, liability, damage, claim
or expense and reasonable legal counsel fees incurred in connection therewith)
to which the Distributor or such of its partners, officers, employees,
representatives or controlling person may become subject under the '33 Act,
under any other statute, at common law, or otherwise, arising out of the
acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Fund or any of the Fund's trustees, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, shareholder report or other information covering Shares filed or
<PAGE>
made public by the Fund or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading
unless such statement or omission was made in reliance upon information
furnished to the Fund by the Distributor. In no case (i) is the Fund's
indemnity in favor of the Distributor, or any person indemnified to be deemed
to protect the Distributor or such indemnified person against any liability to
which the Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of his obligations and duties
under this Agreement, or (ii) is the Fund to be liable under its indemnity
agreement contained in this Paragraph with respect to any claim made against
Distributor, or person indemnified unless the Distributor, or such person, as
the case may be, shall have notified the Fund in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or upon such person (or after the Distributor or such person shall
have received notice of such service on any designated agent). However, failure
to notify the Fund of any such claim shall not relieve the Fund of any
liability which the Fund may have to the Distributor or any person against whom
such action is brought otherwise than on account of the Fund's indemnity
agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own expense, in the
defense, or, if the Fund so elects, to assume the defense of any suit brought
to enforce any such claim, but if the Fund elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Fund and satisfactory
to the Distributor, to its partners, officers, employees or representatives, or
to any controlling person or persons, defendant or defendants, in the suit. In
the event that the Fund elects to assume the defense of any such suit and
retain such legal counsel, the Distributor, its partners, officers, employees,
representatives or controlling person or persons, defendant or defendants in
the suit, shall bear the fees and expenses of any additional legal counsel
retained by them. If the Fund does not elect to assume the defense of any such
suit, the Fund will reimburse the Distributor, such partners, officers,
employees, representatives or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them. The Fund agrees to promptly notify the Distributor of
the commencement of any litigation or proceedings against it or any of its
trustees, officers, employees or representatives in connection with the issue
or sale or any Shares.
9. Authorized representations. The Distributor is not authorized by the
Fund to give on behalf of the Fund any information of to make any
representations in connection with the sale of Shares other than the
information and representations contained in a registration statement of
prospectus filed with the Securities and Exchange Commission ("SEC") under the
<PAGE>
'33 Act and/or the '40 Act, covering Shares, as such registration statement and
prospectus may be amended or supplemented from time to time, or contained in
shareholder reports or other material that may be prepared by or on behalf of
the Fund for the Distributor's use. This shall not be construed to prevent the
Distributor from preparing and distributing tombstone ads and sales literature
or other material as it may deem appropriate. No person other than Distributor
is authorized to act as principal underwriter (as such term is defined in the
'40 Act) for the Fund.
l0. Term of Agreement. The term of this Agreement shall begin on the date
first above written, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect until May 1987. Thereafter, this Agreement
shall continue in effect from year to year, subject to the termination
provisions and all other terms and conditions thereof, so long as: (a) such
continuation shall be specifically approved at least annually by the Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund and, concurrently with such approval by the Board of Trustees or poor to
such approval by the holders of the outstanding voting securities of the Fund,
as the case may be, by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the trustees of the Fund
who are not parties to this Agreement or interested persons of any such party;
and (b) the Distributor shall not have notified the Fund, in writing, at least
60 days prior to June 30, 1985 or poor to June 30 of any year thereafter, that
it does not desire such continuation. The Distributor shall furnish to the
Fund, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof.
11. Amendment and Assignment of Agreement. This Agreement may not be
amended or assigned without the affirmative vote of a majority of the
outstanding voting securities of the Fund, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
12. Termination of Agreement. This Agreement may be terminated by either
party hereto, without the payment of any penalty, upon 60 days prior notice in
writing to the other party; provided, that in the case of termination by the
Fund such action shall have been authorized by resolution of a majority of the
trustees of the Fund who are not parties to this Agreement or interested
persons of any such party, or by vote of a majority of the outstanding voting
securities of the Fund.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
<PAGE>
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Fund to take any
action contrary to its Declaration of Trust or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Fund of its
responsibility for and control of the conduct of the affairs of the Fund.
14. Definition of Terms. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the '40 Act shall be resolved by reference to such term or
provision of the '40 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission
validly issued pursuant to the '40 Act. Specifically, the terms "vote of a
majority of the outstanding voting securities", "interested persons",
"assignment', and "affiliated person", as used in Paragraphs 10, 11 and 12
hereof, shall have the meanings assigned to them by Section 2(a) of the '40
Act. In addition, where the effect of a requirement of the '40 Act reflected in
any provision of this Agreement is relaxed by a rule, regulation or order of
the Securities and Exchange Commission, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized representatives and their respective corporate
seals to be hereunto affixed, as of the day and year first above written.
Working Assets Common Holdings
By: Sophia Collier
--------------------------
Sophia Collier, Treasurer
<PAGE>
Attest:
- ------------------------------
Secretary
Working Assets Capital Management
By: Joe Lyons
--------------------------
Joe Lyons
Addendum to Distribution Agreement
Paragraph 3(b) to the Distribution Plan is amended as follows:
The Distributor may make Permitted Payments in any amount to any Qualified
Recipient, provided that (i) the aggregate of (A) the total amount of all
Permitted Payments to all Qualified Recipients (whether made under (a) and/or
(b) above) and (B) the total of Permitted Expenses (as hereinafter defined) do
not exceed in any fiscal year of the Fund the percentage provided in the then
current prospectus.
Paragraph 4 to the Distribution Plan is amended as follows:
4. Expenses Authorized. The Distributor is authorized, pursuant to this Plan,
to purchase advertising of shares of the Fund, to pay for sales literature and
other promotional material, including items, such as books, that may be given
to purchasers of fund shares, and to make payments to the salesmen of the
Distributor. Any such advertising and sales material may include references to
other open-end investment companies or other investments and any salesmen so
paid are not required to devote their time solely to the sale of Fund shares.
Any such expenses ("Permitted Expenses") shall be reimbursed or paid by the
Fund, except that the amount of reimbursement or payment of Permitted Expenses
by the Fund plus the amount of Permitted Payments to Qualified Recipients shall
not in any fiscal year exceed the percentage provided in the then current
prospectus.
Exhibit e(2)
RENEWAL OF DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this 18th day of May, 1998, between Citizens
Investment Trust, a Massachusetts Business Trust (hereinafter called the
"Trust") and Citizens Securities, Inc., a California Corporation (hereinafter
called the "Distributor").
WITNESSETH:
WHEREAS, there is now in effect a Distribution Agreement dated May 30,
1995, to be in effect through May 31, 1998, between the Trust and the
Distributor, to act as distributor for the shares of the Trust, to solicit
orders for the sale of shares and to sell the Trust's Shares, to be furnished
to the Trust by the Distributor on certain terms and conditions and subject to
certain provisions set forth therein; and
WHEREAS, said Agreement was reapproved by the vote of the holders of a
majority of the outstanding shares of the capital stock of the Trust at the
Special Meeting of Stockholders held May 18, 1992, and said Agreement provides
for year to year renewals by mutual consent, upon certain specified conditions,
and the renewal of such agreement has been approved by the Board of Trustees of
the Trust on May 18, 1998; and
NOW, THEREFORE, such parties agree as follows:
1. The Distribution Agreement dated May 30, 1995, is hereby renewed for the
additional period of 12 months, beginning June 1, 1998 and ending at the
close of business on May 31, 1999.
2. In all other respects said Distribution Agreement, as now amended and in
effect, is reaffirmed and shall continue in effect for the period provided
by such Agreement as renewed by this Agreement.
3. This Agreement may be executed in several counterparts, each of which
shall be original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names by their duly authorized officers as of the
day and year first above written.
Citizens Investment Trust Citizens Securities, Inc.
By /s/ Azie Taylor Morton By /s/ Sophia Collier
----------------------- -------------------------
Azie Taylor Morton Sophia Collier
Chair President
Exhibit e(5)
Citizens Funds
230 Commerce Way
Suite 300
Portsmouth, NH 03801
__________ __, 1999
Citizens Securities, Inc.
230 Commerce Way
Suite 300
Portsmouth, NH 03801
Re: Citizens Small Cap Index Fund - Distribution Agreement
Ladies and Gentlemen:
This letter serves as notice that Citizens Small Cap Index Fund (the
"Fund") is hereby added to the list of series of Citizens Funds (the "Trust")
to which Citizens Securities, Inc. ("Citizens Securities") renders services as
distributor pursuant to the terms of the Distribution Agreement dated as of
May 16, 1992, as amended (the "Agreement") between the Trust and Citizens
Securities.
The fees to be paid to Citizens Securities with respect to the Fund,
pursuant to the Agreement are as follows:
Citizens Small Cap Index Fund (Standard shares) - 0.25%
Please sign below to acknowledge your receipt of this notice adding the
Fund as a beneficiary under the Agreement.
CITIZENS FUNDS
By: ________________________
Title: ________________________
Acknowledgment:
CITIZENS SECURITIES, INC.
By: _____________________
Title: _____________________
Exhibit g(2)
Citizens Funds
230 Commerce Way
Suite 300
Portsmouth, NH 03801
__________ __, 1999
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Re: Citizens Small Cap Index Fund - Custodian Contract
Ladies and Gentlemen:
Pursuant to Section 17 of the Custodian Contract dated as of January 8,
1996 (the "Contract"), between Citizens Funds (the "Trust") and State Street
Bank and Trust Company (the "Custodian"), we hereby request that Citizens Small
Cap Index Fund (the "Fund") be added to the list of series of the Trust to
which the Custodian renders services as custodian under the terms of the
Contract.
Please sign below to evidence your agreement to render such services as
custodian on behalf of the Fund and to add the Fund as a beneficiary under the
Contract.
CITIZENS FUNDS
By: _________________________
Title: _________________________
Agreed:
STATE STREET BANK AND TRUST COMPANY
By: _________________________
Title: _________________________
Exhibit h(3)
Citizens Funds
230 Commerce Way
Suite 300
Portsmouth, NH 03801
__________ __, 1999
Citizens Advisers, Inc.
230 Commerce Way
Suite 300
Portsmouth, NH 03801
Re: Citizens Small Cap Index Fund - Administrative Services Agreement
Ladies and Gentlemen:
This letter serves as notice that Citizens Small Cap Index Fund (the
"Fund") is hereby added to the list of series of Citizens Funds (the "Trust")
to which Citizens Advisers, Inc. ("Citizens Advisers") renders services as
administrator pursuant to the terms of the Administrative Services Agreement
dated as of February 1, 1993 (the "Agreement") between the Trust and Citizens
Advisers.
Please sign below to acknowledge your receipt of this notice adding the
Fund as a beneficiary under the Agreement.
CITIZENS FUNDS
By: _________________________
Title: _________________________
Acknowledgment:
CITIZENS ADVISERS, INC.
By: ________________________
Title: ________________________
Exhibit (i)
FORM OF OPINION
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
__________ __, 1999
Citizens Funds
230 Commerce Way
Suite 300
Portsmouth, NH 03801
Ladies and Gentlemen:
We have acted as counsel to Citizens Funds, a Massachusetts business trust
(the "Trust"), in connection with Post-Effective Amendments Numbered 44 and
____ to the Trust's Registration Statement filed with the Securities and
Exchange Commission on April 15, 1999 and __________ __, 1999 (collectively,
the "Amendments"), with respect to the establishment of Citizens Small Cap
Index Fund (the "Fund") as a separate series of the Trust.
In connection with this opinion, we have examined the following described
documents:
(a) the Amendments;
(b) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the existence of the Trust;
(c) copies, certified by the Secretary of State of the Commonwealth of
Massachusetts, of the Trust's Declaration of Trust and of all amendments
thereto on file in the office of the Secretary of State; and
(d) a certificate executed by the President of the Trust, certifying as
to, and attaching copies of, the Trust's By-Laws and certain votes of the
Trustees of the Trust authorizing the issuance of shares of the Fund.
<PAGE>
FORM OF OPINION
__________ __, 1999
Page 2
In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, the authenticity and completeness of all documents reviewed by us in
original or copy form and the legal competence of each individual executing any
document.
This opinion is based entirely on our review of the documents listed
above. We have made no other review or investigation of any kind whatsoever,
and we have assumed, without independent inquiry, the accuracy of the
information set forth in such documents.
This opinion is limited solely to the laws of the Commonwealth of
Massachusetts (other than the Massachusetts Uniform Securities Act, as to which
we express no opinion) as applied by courts in such Commonwealth to the extent
such laws may apply to or govern the matters covered by this opinion.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon and subject to the foregoing, please be advised that it is our
opinion that the shares of the Fund, when issued and sold in accordance with
the Amendments and the Trust's Declaration of Trust and By-laws, will be
legally issued, fully paid and non-assessable, except that, as set forth in the
Amendments, shareholders of the Fund may under certain circumstances be held
personally liable for the Trust's obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Amendments.
Very truly yours,
BINGHAM DANA LLP
Exhibit o
CITIZENS INVESTMENT TRUST
FORM OF MULTIPLE CLASS PLAN
THIS MULTIPLE CLASS PLAN, dated as of __________ __, 1999, of Citizens
Funds, a Massachusetts business trust (the "Trust"), on behalf of its series
Citizens Index Fund, Citizens Emerging Growth Fund, Citizens Global Equity
Fund, Citizens Small Cap Index Fund, Citizens Income Fund and Working Assets
Money Market Fund (collectively, the "Series");
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"); and
WHEREAS, the shares of beneficial interest (without par value) of the
Trust (the "Shares") are divided into separate series and may be divided into
one or more separate classes;
WHEREAS, the Shares of each Series have been divided into multiple
classes, and the Trust desires to adopt this Multiple Class Plan (the "Plan")
on behalf of each of the Series as a plan pursuant to Rule 18f-3;
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information and
considered such pertinent factors as it deemed necessary to an informed
evaluation of this Plan and determination as to whether this Plan should be
adopted and implemented, and has determined that the adoption and
implementation of this Plan, including the expense allocation contemplated
herein, are in the best interests of each class of Shares individually, as well
as the Trust and the Series;
NOW THEREFORE, the Trust hereby adopts this Plan pursuant to Rule 18f-3
under the 1940 Act, on the following terms and conditions:
1. Each of the Series have heretofore issued, and may from time to time
hereafter issue, Shares in one or more classes (each, a "Class" and
collectively, the "Classes"). Shares so issued will have the rights
and preferences set forth in the Trust's then current registration
statement relating to the applicable Series and Class.
<PAGE>
2. Shares issued in Classes will be issued subject to and in accordance
with the terms of Rule 18f-3 under the 1940 Act, including, without
limitation:
(a) Each Class shall have a different arrangement for shareholder
services or the distribution of securities or both, and shall
pay all of the expenses of that arrangement;
(b) Each Class may pay a different share of other expenses, not
including advisory or custodial fees or other expenses related
to the management of the Trust's assets, if these expenses are
actually incurred in a different amount by that Class, or if the
Class receives services of a different kind or to a different
degree than other Classes;
(c) Each Class shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its
arrangement;
(d) Each Class shall have separate voting rights on any matter
submitted to shareholders in which the interests of one Class
differ from the interests of any other Class; and
(e) Except as otherwise permitted under Rule 18f-3 under the 1940
Act, each Class shall have the same rights and obligations of
any other Class.
3. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the Board of
Trustees of the responsibility for and control of the conduct of the
affairs of the Trust.
4. This Plan shall become effective as to each Series upon approval by a
vote of the Board of Trustees and vote of a majority of the Trustees
who are not "interested persons" of the Trust (the "Qualified
Trustees").
5. This Plan shall continue in effect indefinitely unless terminated by
a vote of the Board of Trustees of the Trust. This Plan may be
terminated at any time with respect to any Series by a vote of the
Board of Trustees of the Trust.
6. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that any material amendment of this Plan shall be
effective only upon approval by a vote of the Board of Trustees of
the Trust and a majority of the Qualified Trustees.
<PAGE>
7. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the
1940 Act.
8. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit p
Citizens Funds: Power of Attorney
The undersigned hereby constitutes and appoints Sophia Collier and Joseph F.
Keefe with full powers of substitution as his true and lawful attorneys and
agents to execute in his name or on his behalf in any and all capacities the
Registration Statement on Form N-1A, and any and all amendments thereto, filed
by Citizens Funds (the "Registrant") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended, and any all other instruments with
such attorneys and agents, or any of them deem necessary and advisable to
enable the Registrant to comply with the Securities Act of 1933, as amended,
the Investment Company Act of 1940, as amended, the rules, regulations and
requirements of the Securities and Exchange Commission and the securities laws
of any state or other jurisdiction; and the undersigned hereby ratifies and
confirms as his own act and deed any and all that such attorneys and agents, or
any of them, shall do or cause to be done by virtue hereof. Any one of such
attorneys and agents shall have, and may exercise, all of the powers hereby
conferred.
In Witness Whereof, the undersigned has hereunto set his hand this 14th day of
April, 1999.
John L. Shields
- ---------------------
John L. Shields
